SURVIVING AND THRIVING DURING THE GLOBAL
PANDEMIC OF 2020Surviving and Thriving During theGlobal Pandemic of 2020, Part 14
Featuring Jim Rickards
ADDISON WIGGINHOSTED BY:
FEATURING:
JIM RICKARDS
Addison Wiggin is the founder of Agora Financial and the Financial Reserve. He is also the best-selling author of Financial Reckoning Day; Empire of Debt (with Bill Bonner); The Demise of the Dollar; and writer and executive producer of the documentary I.O.U.S.A., shortlisted for an Academy Award.
James G. Rickards is the editor of Strategic Intelligence, Project Prophecy, and Crash Speculator. He is an American lawyer, economist, and investment banker with 40 years of experience working in capital markets on Wall Street. He is also a best-selling author of Currency Wars, The New Case For Gold, and Aftermath.
Addison:
Jim:
Welcome to Surviving and Thriving During the Global Pandemic. This is part 14.
We have with us today Jim Rickards, well known to you all. Jim is the editor of
Strategic Intelligence, and we’ve been working together now for seven or so years.
And Jim has made some of the more prescient forecasts in those seven years that
have helped guide Reserve members, and also those who read through Paradigm
Press. I’d like to welcome Jim. Welcome. You just moved into a new condo, you were
just telling me?
Thank you, it’s great to be with you up here in Portsmouth, New Hampshire, our state
motto is Live Free or Die, so I subscribed to that.
Who Wins the Election… President Trump or Puppet Biden?
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Surviving and Thriving During the Global Pandemic of 2020
Yeah. Well, I grew up in New Hampshire. Actually, not far from there, about eight
miles from there. So I know the slogan.
One of the things that we do in Strategic Intelligence is every Monday we send out
what we like to call Five Links, and you comb through the news and you look for
articles while you’re doing your research, and while you’re thinking about the way
things are unfolding during the pandemic, and just in general, the markets. The last
time you were on, we talked a lot about the deficit spending that was going on, the
rise of the national debt, those kinds of things.
But while you’re doing your research, you also come up with a number of interesting
themes that we may or may not want to dive into moving forward. And then we send
those out every Monday, it’s five links and it links directly to the articles, but then you
put it into perspective.
So today’s going to be kind of fun because we’re going to do a virtual Five Links, and
we get to hear from Jim directly, as he puts these different themes into context of
what’s happening in the markets, and with the Strategic Intelligence Portfolio.
So I’m going to just jump right in. I’ve been writing this headline in my head, The
Man who Predicted a Trump Win in 2016 Now Predicts a Biden Win in 2020. Do you
want to characterize that? That was from last Monday’s Five Links.
I wouldn’t go quite that far. I have a model, and it’s a predictive analytic model, and
it’s the one I used in 2016 to predict the Trump victory. And I actually did that on a
network broadcast on three different continents, I was in Australia, Europe, and in
New York. And I happened to be on a book tour at the time, one of my books, The Road to Ruin was just coming out at that time. I was traveling all over the world to
promote the book. but the TV anchors were all, “Jim you’re American, tell us who’s
going to win the election.”
And I said, Trump, I said it categorically, it wasn’t like a wishy-washy thing. I had
a very good reason to believe that it was true. But the context is important because
at the time the polls were giving Hillary Clinton a 92 or 93% probability of winning.
She was ahead in the polls. The betting odds were strongly in her favor. The TV
commentators were united, they were already discussing the Clinton cabinet, et cetera.
So it wasn’t just getting the forecast right, it was doing it in the face of overwhelming
Addison:
Jim:
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Surviving and Thriving During the Global Pandemic of 2020
sentiment from polls, politicians, pundits, and others, that this thing was in the bag
for Hillary. But the point I make is that I don’t claim to be smarter than anybody else,
but I do say we have better models. And if you
have bad models or bad polls, you’re going to get
the wrong result every time. But if you have good
models, you can get a pretty good track record.
And that’s what we were using.
And polls are part of it. That’s one of the things I look at, but I use a lot of anecdotal
evidence. And a lot of analysts don’t like anecdotal evidence, they’re like, “Well, you
can’t quantify it, you can’t stick it in an equation.”
But the point I make is, “Yeah, but it’s real people doing real things. What could be
more important if you’re talking about an election?” I actually took a Greyhound bus
from Spokane, Washington to a place called Moses Lake, Washington, which is in
the middle of the desert, east of the Cascade Mountains. And I don’t know too many
people who do what I do, spend three hours on a Greyhound bus, but I found it very
instructive because I could count lawn signs, and go through little towns, and get the
sense of the thing. And a lot else, I don’t need to belabor the point. So there’s a lot
that goes into the models. So right now, this may be disappointing, but I’ve got it at
50/50.
And that sounds kind of wimpy. It’s like, “Oh boy Jim, what good is that, 50/50?” But
in a scientific sense, we use a Bayes’ theorem, and what that means is that there’s a
high degree of uncertainty around it. We actually don’t know who’s going to win the
election. But here’s what we can say, it is going to be close and Biden could win. So
I’m not to the point of saying Biden will win, but I am at the point of saying Biden
could win.
And that’s important because the markets have not discounted that. Markets
supposedly look into the future, get everything right. And future events are reflected
in today’s prices, and you can’t beat the market, and just go along for the ride,
and get it an index fund and all that. That’s all nonsense, everything I just said is
nonsense. If markets try to look into the future, they usually get it wrong. It doesn’t
mean markets are dumb or stupid. It’s a source of information. You should use them
and pay attention to them. But the idea that the markets got this all figured out, it’s
completely wrong.
"If you have bad models or bad polls, you’re going to get the wrong
result every time. But if you have good models, you can get a pretty
good track record."
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Surviving and Thriving During the Global Pandemic of 2020
The markets did not see the 2008 financial crisis coming. They did not see the 2020
financial crisis coming. They did not see the 2015 collapse of Chinese equities
coming. Markets as forecasting tools get
it wrong most of the time. It doesn’t mean
markets are dumb. It just means that they don’t
work the way people expect.
But I can tell you categorically that today
markets have not discounted for a Biden
victory. And again, it’s close. So I’m not saying
Biden will win, I’m saying he could win. And if you asked me, “Is that reflected in
market prices?” The answer is no, absolutely not.
The markets have struggled to price in the pandemic, and they have struggled even
more to price in the depression. We’re in a technical recession right now, that’s sort
of been declared. My analysis is, “Yeah, I get it. But we’re actually in a depression.”
Which is a very different thing, much longer lasting, can even be intergenerational.
But the markets are struggling with that. And mostly not understanding what’s going
on, but they’re trying. But they hadn’t even thought about Biden. When we think
about Biden winning, if that’s what happens...
Yeah, that’s what I’d like you to talk about.
You’re talking about higher taxes, the Green New Deal, forgetting everything
that’s going on in China, and kind of sucking up to the Chinese again. And more
regulation, slower economy... you’re talking about really a disaster. And it’s much,
much worse than that. We can drill into it any way you like Addison.
But the prospect of a Biden victory should be
frightening. Not because he’s a little more liberal,
or he’s a Democrat or whatever, we go back and
forth between Democrats and Republicans... But
because his policies had moved so far to the left,
it actually would be the fulfillment of what is, I don’t even think of it as a socialist
revolution, I think there’s kind of a Marxist-Leninist revolution going on, a cultural
revolution going on right now. Biden would be powerless to stop that from getting
worse.
"The markets did not see the 2008 financial crisis coming. They did not see the 2020 financial crisis coming. Markets as forecasting tools get it wrong most of the time. It doesn't mean markets are dumb. It just means that they don't work the way people expect."
Addison:
Jim:
"I think there's kind of a Marxist-Leninist revolution going on, a cultural
revolution going on right now. Biden would be powerless to stop that from
getting worse."
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And also Biden is mentally incompetent. He’s got some, I’m not a doctor I’ll just
declare that, but I can judge you and behavior, I’ve been around long enough, and
I know other experts who do say the same thing. He clearly cannot form cogent
thoughts. He cannot complete sentences. He doesn’t know where he is a lot of the
time. He gets lost in mid-thought. He gets facts wrong.
Those are not just gaps. I mean we’re, “Oh, you know Joe Biden, he’s always made
gaffes.” Well, he has always made gaffes, these are not gaffes, these are signs of a
serious cognitive decline, which accelerates with time.
Now, whether it’s early-onset Alzheimer’s, or early-stage dementia, or some other
deficiency. Again, I’m not the doctor, but I know that he will be removed if he wins;
he’ll be removed from office within a year under the 25th amendment as incapable
of fulfilling the duties of the presidency. When I say incapable, I don’t mean, “Oh,
gee, we don’t like your policies,” which is what they tried to do with Trump. Trump’s
mentally fit. You can like him or not like him, that’s fine. A lot of people hate him, but
no one thinks he’s mentally incompetent. They just don’t like his policies or his style.
But in Biden, it would actually be a medical issue, and the cabinet could convene
and remove him from office. So that’s important because when you hear the Biden
vice-presidential pick, which we expect in the coming weeks, he’ll certainly do
it before the convention, which is not a convention. The Democrats are having a
virtual convention, which means they’ll stage manage Biden’s appearances on
teleprompter, and with medication, et cetera. So that’ll just cover it up. The media
won’t report it because it’s not in their interest to do so.
So what you’re saying is that whoever they nominate as the vice president, we should
consider to be the president-elect?
Within a year, that’s exactly right. And this is all being very cynically manipulated by
the Obama resistance team.
So when you look at it, again, you have to do a deep dive on this, but how do you
remove a president under the 25th amendment? Well, you need the Cabinet to
vote to start that process. There are a few other steps, but basically it starts with the
Cabinet.
Who’s going to be in the Cabinet? Well, I can make a pretty good estimate. I would
Jim:
Addison:
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Surviving and Thriving During the Global Pandemic of 2020
say Sally Yates as Attorney General, Susan Rice as Secretary of State, if she’s not the
VP, she might be the VP, but if she’s not put in handcuffs by John Durham and the
next month... maybe Samantha Power as Secretary of State, you’re going to see all
these people come back, the B team of the Obama Administration is going to be the
A team of the Biden Administration. But the point is, they’re all going to be Obama
loyalists, they’re going to orchestrate the pick of the VP. The VP will be the president,
this will all be done within a year of Biden winning.
So my point is, there’s plenty of time to talk about that, we’re just kind of telling
viewers now, but my point is the market hasn’t thought about any of this. I’m telling
you what’s going to happen if Biden wins. And I’m telling you he might win. But
I’m also telling you the market isn’t ready for any of this. Which means that there’s
a huge opportunity for investors because the gap between the perception and the
reality is as big as I’ve ever seen it.
The story, the sort of mob idea of the Trump Administration is that he’s good on
the economy. And then we have the pandemic, and the economy gets shut down.
How much is that playing into the forecast that Biden would win? And then, if Biden
doesn’t win what can we see differently from Trump? I guess it probably depends on
how the pandemic continues to play out. But he doesn’t seem that concerned about
the massively increasing level of debt, which is a response to a crisis, I understand,
but it’s also something that we’re going to be paying for for a long time.
Yeah, not necessarily. We’ll talk about that, the debt is a very big deal. I agree with
you on that Addison. But I also agree with your first statement, which is that nobody
cares. And let’s talk about that a little bit too.
Here’s the thing with Trump. So you got Trump for three years in office, 2017, 2018,
2019, and then kind of through the first quarter of 2020... and then we have Trump
under the conditions of pandemic; two very different things.
So for the first three years and two months, let’s say, I would describe Trump as
follows. Yeah, he’s vulgar, he’s crude, he’s combative, he calls names, he blames other
people for a lot of what he does, and he has a lot of behavioral traits that people find
offensive even if you support him or like his policies, on the one hand.
On the other hand, he got everything right on policy. He confronted China at a
time when China needed to be confronted. In fact, I would’ve said that should have
Addison:
Jim:
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Surviving and Thriving During the Global Pandemic of 2020
happened 20 years ago, but maybe better late than never. He reduced regulation. He
reduced taxes. He got unemployment to 45 year lows, black unemployment, Latino
unemployment... all of those things were at the all time best results, meaning the
unemployment figures were the lowest, or put differently the employment situation
was as good as it’s ever been.
Inflation was under control. Growth was never as good as Trump and Larry Kudlow
were bragging. There’s a lot of happy talk, but it was better than anybody else. I’ll say
that. 2.2% growth is not great by US standards, but it was better than anybody in the
world, except for China. And China is a developing economy, the economics there
are very different.
So I would say Trump behaviorally kind of annoyed, well infuriated his detractors,
and annoyed even his supporters. And I would include myself in that category. But
his policies were spot on. Boy, did he get a lot of things right.
However, in the beginning of March, really late March, early April, 2020, I would
say the wheels fell off. And here’s what happened. I’ve always said, “If you want
to understand Trump, you got to spend time in Queens.” Queens, New York, this
is not Manhattan, this is not the Upper East Side, it’s not even Brooklyn. Brooklyn
people can kind of be a little rough around the edges, but they have enormous
accomplishments, they move on, and they kind of can leave Brooklyn behind.
Queens, you never leave it behind. There’s street fighters. The fighting starts in the
sandbox, and it never stops. And if you knew that about Trump, you would say,
people say, “Oh gee, I like Trump, but I wish he would stop tweeting.” Or, “I like
Trump, but I wish he was name calling.”
I say, “Get over it. The guy is 72, 73 years old”.
And 73-year-old guys don’t change. They don’t change. That’s probably been true
since he was 13, but at 73, I think we can count on it.
So get used to it. If you like his policies, stay with him. If you don’t like his behavior,
get over it, because it’s not going to change. However, all of the things that served
him well in the rough and tumble politics have not served him well in the pandemic.
And I just wrote a book on this, it’s with my publisher, it’ll be coming out in October. I
think it will be the first book that deals with the pandemic and the depression.
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Surviving and Thriving During the Global Pandemic of 2020
You’ll have a lot of doctors writing books or whatever, but I sort of tackle both
subjects. But I make the point that the virus doesn’t have any politics. The virus
doesn’t care. The virus wants to kill you. And that’s all the virus knows. It’s not a
Republican. It’s not a Democrat. It’s not red. It’s
not blue. You can politicize the virus if you want
to, but the virus is not political.
And Trump was actually lost dealing with a
crisis that actually wasn’t political. It became
politicized, but when you deal with a pandemic
there’s a different kind of leadership required.
You can’t go around picking fights. Actually, Americans don’t care about anything
right now, except the virus, and unemployment, they care about those two things.
Politics are third, normally an election year politics would be number one, and
Trump would be, again, being Trump, and probably... Well, until January I gave
Trump a 75% probability of winning. I had Trump on his way to 90% chance. I had
Trump as a sure winner. But the thing about the models is you have to update.
You have to be honest with yourself. That’s the hardest part. Just be really tough on
yourself. And you can’t make Trump a 75% favorite now, that’s impossible.
But my point is the things that served Trump well in the political rough and
tumble were really his undoing in a pandemic. Because he never understood, still
doesn’t understand that the pandemic isn’t political. So to see him in the White
House Briefing Room, standing up at the podium, picking fights with Jim Acosta,
or whoever else is in the White House Press Corps, the American people were
extremely let down. They’re like, “Really? We’re worried about dying. Our neighbors
are dying. My wife just got laid off. My husband just got laid off. We can’t pay the rent.
And you’re picking a fight with Acosta again, really?”
And so I would say he started out okay with the taskforce, Pence, Dr. Birx, I’m not a
big fan of Dr. Fauci... but they did a pretty good job. But by March it had degenerated
into this daily shouting match with reporters. And Americans just tuned out. They
said, “Well, we want leadership. You’re down in the gutter. That’s not what we want.”
And that’s when Biden really surged in the polls and Trump’s popularity approval
rating dropped, and his poll rating dropped. And he went from being kind of an-odds
on favorite to win, to being 50/50.
"The virus doesn't have any politics. The virus doesn't care. The virus wants to kill you. And that's all the virus knows. It's not a Republican. It's not a Democrat. It's not red. It's not blue. You can politicize the virus if you want to, but the virus is not political."
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Surviving and Thriving During the Global Pandemic of 2020
So then you say, “Well, why wouldn’t you say that Biden’s going to win?” The answer
is that Biden’s got his own issues, which we’ve already talked about, which is he’s in
serious, progressive and accelerating mental decline. And a lot of people who have
switched over to Biden have never heard Biden speak.
They know he’s a Senator from Delaware. They know he was vice president, and he’s
not Trump. So he’s like, “Okay, I hate Trump. So I’m going to vote for Biden.” Really?
Do you know anything about Biden? Have you seen him talk lately?
They won’t let him talk. They literally won’t let him out of his house. And watch the
debates. People say, “Well, you can medicate the situation for two hours in a debate
form.” I don’t know. I don’t know how he’s going to get through the debates.
And there’s a difference in support. Trump’s support has been declining, but it’s rock
solid. He gets around 40%. He doesn’t go a lot lower. It’s not like Jimmy Carter, or
George W. Bush in 2008, where the popularity rating just tanks. He could go from 47
to 40, but he doesn’t go much below 40. So he’s got a smaller base, but it’s rock solid.
Biden has a larger base, but it’s very squishy when you ask, and this gets into the
science of polling, but when you ask people who say, “Oh, I’m supporting Biden...”
Okay, “How passionate, or how ardent is your support on a scale of one to five?”
They’re like, “Two.”
In other words, it’s a very squishy base that could be turned around.
So to me it’s almost as if everything that’s happened before doesn’t count, we’re in
a new horse race with a clean slate, 50/50, three months to go, Trump could pull
this out, but he better shift gears really fast, and Biden could win if he stays in his
basement, but more he gets out the tougher it will be. So it’s just an interesting
dynamic.
It seems to me that the economy is going to continue to play an important role. I
know you’ve written recently about the recovery being slower than many people
expect. I think that’s going to play a role if we can manage to get a recovery that
looks like a recovery in trends then Trump’s numbers probably begin to rise again.
Wouldn’t you say?
Addison:
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Surviving and Thriving During the Global Pandemic of 2020
And people expect it. I think that’s going to play a role if we can manage to get a
recovery that looks like a recovery in trends then Trump’s numbers probably begin to
rise again. Wouldn’t you say?
Well, they’ll talk it up, but again, any recovery, however you define it, has to be
put in the context of how severe the drawdown was. Lately, we just saw the June
employment report come out in early July and it showed unemployment dropped
from 13.3% to 11.1%. I could be off by decimal place, but roughly over 13% to a little
bit over 11%. And a lot of jobs are created, I think 4.8 million if I’m not mistaken.
About 4.8 million jobs are created. The White House is shouting, “Hey, we created
almost five million jobs. Unemployment dropped 2%.” And that’s true. Those
statistics are true, but you have to put the 4.8 million jobs in the context of 47 million
Americans who have applied for unemployment benefits. Okay, nice job with the
four million plus jobs, but you still got 36 million to go.
Yeah, there was good job creation in June. No
doubt about it. But the job losses were so severe
in March, April and May that you’re not going
to get back to full employment until 2025. Same
thing with output. Basically, GDP estimates, a
lot of people were saying, “Well, GDP is going to show a bounce back in the third
quarter.” Well, that’s highly likely, but in the second quarter, we’re going to show that
it dropped at a 35% annualized rate. Now 35% more in quarter, you kind of have to
divide by four. That’s in absolute terms, that’s a seven or 8% drop in the economy. But
when you take it down, I’ll use round numbers from, normalize at a 100 and take it
down to 90, okay, that’s a 10% drop. And you go up 5%, which by the way, would be
the highest growth since the early 1980s. You go up 5%, 5% of 90 is 4.5. You’re back to
94.5, but you’re not back to a 100.
In other words, and same thing again, if you had another year of 4% growth, okay,
that gives you another 3.6, but you’re still not back to a 100. We’re not going to get
to the best case, best case I would say, we’re not going to get to 2019 levels of output
until 2023 at the earliest. And we’re not going to get to 2019 full employment until
probably 2025. That’s a depression. Will you see good quarterly, monthly statistics?
The Greatest Blunder in the History of Economics
Addison:
Jim:
"There was good job creation in June. No doubt about it. But the job losses
were so severe in March, April and May that you're not going to get back to full
employment until 2025."
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Surviving and Thriving During the Global Pandemic of 2020
Yes, but you’re digging yourself out of a very deep hole and we’re nowhere near out
of the hole. And if you’re unemployed, those numbers don’t mean very much. If your
business is closed permanently, those numbers don’t mean very much. You’re broke.
I would say chalk that up in a Biden’s favor, if the economy is having difficulty
recovering or opening back up in many cases it’s been re-closed in different states.
Yeah, that’s the thing. I have a chapter in my new book on the lockdown, I call it, The Greatest Blunder in the History of Economics. The greatest economic blunder in
the history of the world is another way to put it. We did not have to do the lockdown.
There’s a rule that I think managers and statisticians and others are familiar with, it’s
called the 90/10 rule. You get 90% of the benefit at 10% of the cost. But if you want the
last 10%, that’s 90% of the cost. In other words, we could have gotten almost all the
benefit of the lockdown with social distancing, face masks, washing your hands, okay
maybe cancel some big venue events, like some baseball games or something like
that. Which would have been a relatively low cost. We could have got almost all of the
benefits. But by going for the total lockdown, we destroyed the greatest economy in
the history of the world for very little benefit compared to the alternatives.
And this is, in my book, I knew I have a chapter on the virus and the pandemic and
my editor said, “Jim, you’re the economic analyst. We want a book on the new, great
depression, which is what we call it. And we don’t really want you to talk about
medicine.” But I said, “Yeah, but it’s like writing about the structure in New Orleans
in 2005 without mentioning Hurricane Katrina.” If you want me to write about the
depression, we have to intro with the pandemic because that’s how it started. And
they agreed to that. But I knew I would be criticized. People say, “Well Jim, you’re not
an immunologist, you’re not an epidemiologist, you’re not a virologist why are you
writing about these things?”
My answer is twofold. First of all, I went to Johns Hopkins so I know a little bit about
it. And I’m pretty good at math. Epidemiology is only partly about biology. It’s
mostly about mathematics and getting functions correct and knowing how to do
super linear functions. But more to the point,
we let the immunologists run the economy. So
don’t tell me now an economist can’t talk about
immunology and virology. And I got to the point
where it was torturous. There’s a lot of research,
Addison:
Jim:
"We let the immunologists run the economy. So don't tell me now an economist can't talk about immunology and virology. You’ve been driving my lane for the past 3 months."
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but I was one footnote per sentence. I was like, I know I’m going to get trashed. I’m
going to put my authorities out there.
But my point being, Trump really bungled the response. The American people were
never going to blame Trump for the pandemic. Trump did not cause the pandemic,
no politician did. The Chinese maybe, but not in the US, so he was never going to
get blamed for the pandemic. And if the economic crisis was a consequence of the
pandemic, he was not going to get blamed for that either. What he was going to
get blamed for was the response function. Okay, you got slammed twice. You got
slammed with a virus and you got slammed with in effect, a new great depression.
How did you handle it? That’s how he will be judged. And he handled it, I would say,
okay. This is kind of a C+, B+ minus report card, maybe C+. But he got a lot of things
right. Cutting off travel to China was right. Cutting off travel from Europe shortly
thereafter was correct. Andrew Cuomo wanted ventilators, Trump got the ventilators.
Everybody wanted masks, Trump got the masks.
By the way, ventilators don’t work. That turns out to be, Andrew Cuomo was on TV
every day screaming, “Ventilators, ventilators, ventilators.” Trump used the Defense
Production Act to mandate companies to make ventilators. They shipped them to
New York. They were never used. New York, never ran out of ICU unit beds, never ran
out of ventilators. It turns out ventilators killed a lot
of people. This shows, I’m not even faulting people
for that, I’m just saying that it shows how little we
know and how many blunders were made. But that
said, Trump blew an opportunity. He could have
been an FDR or maybe some other president who
inspired a great deal of confidence. An Eisenhower or even a Lincoln. And he blew it
because he couldn’t get out of the queen’s sandbox. And he kept picking fights that
people really didn’t care about.
And do you think there’s no time left for that?
There is time. That’s the funny thing about politics. They say a week is a lifetime
and that’s actually true. I ran a Washington office and I was a registered lobbyist
and spent too much time on Capitol Hill. And so I know a little bit about that, but
the point is there is time, but is there temperament? In other words, can Trump
actually... you and I are having a dialogue, we’re putting a message out to our
Addison:
Jim:
"Trump blew an opportunity. He could have been an FDR who
inspired a great deal of confidence. An Eisenhower or even a Lincoln.
And he blew it because he couldn't get out of the queen's sandbox."
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audience so hopefully it’s helpful. But is this conversation we’re having going on
inside the White House? And if so, is Trump listening?
If he’s not, he’s going to lose. If he’s more of the same he’s going to lose. If he shifts
gears, I would say almost immediately and provides the kind of leadership people
are looking for and it doesn’t mean you can’t pick a fight, but I would pick a fight
with some of the immunologists and the other big mistake he made. I hate to keep
harping on mistakes, but they’re important if you’re trying to figure out who’s going
to win the election. We never had a national lockdown. We had 15, because it was
all done at the state level. Trump has a lot of power. I’m very familiar with the
Emergency Powers of the president of the United States. I’m going to go back to the
1950s when we were trying to figure out how to survive a nuclear attack. And when a
lot of these laws were enacted, but they’ve been on the books ever since.
Trump has the power, he did not use very much of it. Here and there a little bit, but
really not very much at all. Which is okay, it should have been left to the governors.
New York blew it, but South Dakota didn’t. South Dakota never had a lockdown and
they never had much coronavirus. And there were a lot of states in between. The
idea, this is the genius of the federal system. The idea that some states might have
resorted to more drastic measures and other states might have done almost nothing
except say, “Wash your hands,” which is good advice, makes sense. Because there
were different strains of the virus, it spread differently in different places. We have
different population densities, et cetera.
But Trump should have said that on day one. He should have said, “My fellow
Americans, every state’s different, the governors are responsible for this. We’re going
to help them anyway we can. If they need equipment, we’re going to get it to them.
If they need money, we’re going to run it through the Congress. If they need medical
expertise, we’re here 24/7.” He should have said, we needed emergency hospitals,
the Army Corps of Engineers will be onsite tomorrow morning. They did surge those
US Navy hospital ships once in New York and one to Los Angeles. They were never
used very much, but they were there. And that was a good thing. That’s the kind of
stuff Trump should have done, but otherwise should have said, “Hey governors, take
the lead and we’re here to support you.”
I think you have to really know how the federal system works to understand Trump’s
position there. But I always thought he could have articulated it better. That it’s more
Addison:
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Surviving and Thriving During the Global Pandemic of 2020
important for the governors to make decisions for their own citizens and then you
localize the response.
Correct. But instead Trump in his usual fad jumped out in front of it. Well, the
minute you jump out in front, you take the blame. And that was a blunder.
All right. I want to move on to another provocative theme that has been gaining
traction. I’ve been reading a lot about the “long March” of Gramsci and also Julius
Evola recently and they’re sort of two sides of the same coin, in my opinion. Antonio
Gramsci was an Italian philosopher in the 1930s and the long March was his idea
that in order to enact a Marxist revolution within the capitalist society, you would
have to infect the universities and the institutions that support democracy and
capitalism with people who have an inherently anti-capitalist point of view.
We’re seeing a lot of that in the streets. A lot of people, Black Lives Matter is certainly
a movement that warrants some attention because of the violence and the desire
for people to be unyoked and live a free life. We can certainly understand that,
but there’s a lot of other elements to those marches that include a sort of Marxist
philosophy. I would say it seems to be the fruition of the long March of Gramsci.
On the other hand, we have guys like Steve Bannon and Aleksandr Dugin in Russia,
who are adherents to a philosophy called Traditionalism with a capital T, that
adheres to kind of a spiritual reawakening, anti-modern point of view, strong borders
and states working together or against each other and a hierarchical society that is
run by a “philosopher king,” to put it in Plato’s words. They’re two sides of the same
point, because they’re collective views of the way society should be organized.
And they connect in the middle and squash out the individual. I happen to be a
libertarian so I believe in individualism and my own right to determine my life. I’m
not very interested in politics other than wondering, who’s going to win the election
and its impact on the economy.
But it seems that this mob ideology has taken to the streets and it has an equal and
opposite counterpart in the Traditionalist camp. Do you have any opinions on the
way that the mob rule of the left seems to be? It’s certainly predominant in the media
width.
I don’t know Steve Bannon personally, seems like a pretty smart guy, but I doubt Jim:
Jim:
Addison:
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Surviving and Thriving During the Global Pandemic of 2020
he’s read very much of Julius Evola because if he did, he wouldn’t be mentioning
the name in public. You said that Antonio Gramsci and Julius Evola were, I think
you used the expression two sides of the same coin. I would say they’re the same
side of the same coin and the coin is fascism. And fascism is one of those words, by
the way, Evola was put on trial in Italy in 1951, after World War II, he was forming
a new fascist party in Italy or he was accused of that and was put on trial. And in
his defense, he said, “I am not a fascist. I am a super fascist.” And he was acquitted.
Know where Julius was coming from.
But here’s the point, there are certain words. And of course, George Orwell
predicted this 75 years ago, where when you’re in an ideological movement and
somebody or some group is pursuing an ideology to the exclusion of all other
views, language is the first casualty. People start giving words, new definitions.
This is what Orwell called “Newspeak” in his novel, 1984. And everything becomes
propaganda and things lose their meaning. It makes it hard to have an intelligent
conversation because you’re trying to use words intelligently. I love a good debate.
I’ll take a debate anytime, but I don’t want to waste my time talking to hard shell
ideologues who aren’t listening and don’t care and just want to use the platform to
propagandize, which of course is what Saul Alinsky recommended, for that matter
Gramsci.
My point is words like fascist have lost their meaning. It’s like, if you don’t agree with
someone, you call him a fascist and everybody’s a fascist, et cetera. Fascism has a
very specific meaning as articulated by Benito Mussolini who was the intellectual
father and the political father of 20th century fascism. And his expression was,
“Everything inside the state, nothing outside the state.” That’s an English translation
of the Italian phrase. But the idea is, it’s not that you can’t have Boy Scouts, but they’ll
be fascist Boy Scouts regulated by the state, et cetera. Something like the Nazi youth.
The greatest fascist movement, one of them was communism. And Stalin we hear
about the antifascist, the Antifa. What is Antifa? Antifa is a shortening of antifascist
action, which is a German group organized by Stalin in the 1930s.
It was an antifascist action, Antifa for short. Well, people say, “Well gee, if Stalin
was organizing Antifa, which he did, he must’ve been antifascist so fascists are bad
and does that make communists good?” Stalin was highly cynical. Stalin was the
greatest fascist of the 20th century. Hitler was a little different. Hitler was more of a
totalitarian, I would say almost satanic figure, and you can call him fascist, that’s fine.
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Surviving and Thriving During the Global Pandemic of 2020
But Stalin knew he was a fascist and he didn’t want to be associated with Hitler. He
said, “We need to position ourselves, the communists, as antifascists otherwise we’re
going to get lumped in with Hitler and Mussolini and all these other guys we don’t
like. We’re going to say we’re the antifascists.” But again, you’re already moving the
language around to pursue an agenda.
Gramsci is an intellectual. He was a neo-Marxist, but he thought Karl Marx got one
thing wrong. He said, “Karl Marx was right about class warfare. He was right about
the bourgeois and the proletariat. He was right about the exploitation of everyday
workers by those who own the means of production, which were the capitalists.”
Gramsci said, “I agree with Marx on all that.” But where he diverged, Marx said,
“This was all going to be rectified by revolution of the proletariats.” Proletariat rise
up, overthrow the capitalists, seize the means of production and have an ideal
communist society. And we’d all live happily ever after. That never happened.
Something like it happened in Russia, but it was immediately perverted into a
totalitarian system.
So the real Marxist revolution never happened. But with Gramsci’s long road, the
first thing they do is take over the schools. Now we can brainwash entire generations.
And as those generations go out in the world, they’re carrying this intellectual virus,
this ideological virus with them. And then
next we’ll take over government agencies.
This is the so-called deep state. And then we’ll
take over unions and then we’ll take over the
colleges and universities. And then eventually
we’ll take over the political system. That’s
going on right now with AOC. AOC, okay a
Starbucks barista in Queens she’s now a member of Congress heading for reelection.
Give her a little time, she’ll have leadership positions. She’s the organizer of the
squad.
She didn’t come out of nowhere. She got huge financial backing from external
sources. That’s legal. I’m not saying it’s not illegal, but don’t think for a minute, these
are just people rising up off the streets saying, “Hey, I want to run for Congress.”
This is calculated. It’s backed. The district attorney in Philadelphia. See what these
organizations have realized, and they’re Soros backed, but not exclusively Soros. A
lot of sources for the funding, including some from the United States government
"AOC was a Starbucks barista in Queens... she's now a member of Congress. Give her a little time, she'll have leadership positions. She's the organizer of the squad. She didn’t just come out of nowhere."
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Surviving and Thriving During the Global Pandemic of 2020
when Obama was directing multi-billion dollar settlements from major banks in the
direction of community organizers, et cetera.
What they do is say, “You know what? You actually don’t need the White House. If
you give me enough District Attorney positions, give me enough Attorney General
positions, give me enough Mayors and the City Council people, give me some Board
of Ed seats, and I’ll turn this country into a communist country before you can blink,”
and that’s what’s going on.
If the DA says, “No bail for anybody,” if the DA says, “We’re letting all the prisoners
loose,” if the DA says, “We’re not going to prosecute people who assault police,”
then guess what? Nobody gets prosecuted. The jails are empty. You don’t need
presidential pardons. Who cares what the Electoral College does? You’ve done it
from the ground up. That was Gramsci’s vision. It’s working. It’s working scarily well.
Gramsci was the ultimate fascist because this is all about state control, they just want
a different kind of state. All Gramsci did, and it’s a big deal, I’m not diminishing it,
Gramsci said, “Instead of doing it from the top down, we’ll do it from the bottom up
and the leaders will never know what hit them. We’ll take over before they know it.”
And this started in the 70s and it’s been going on ever since.
So, the long march through the institutions, but it’s not at a point where it’s too late.
I don’t care if you’re smart enough to get into Harvard or Yale or Columbia, or I’ll
include Johns Hopkins, yeah, good for you. Nice
going, you worked hard. But when you get there,
unless you’re a natural science major and you’re
just going to look at things under a microscope,
you’re going to be indoctrinated. Good luck finding
a history course or a philosophy course or political science course that’s anything
other than ideological indoctrination.
And so it ends up, you’re not uneducated, you’re miseducated, but you don’t
even know it because what have you not been taught? You have not been taught
They took away tools to know you’re being brainwashed… then they brainwashed you.
"Good luck finding a history course or a philosophy course or political
science course that's anything other than ideological indoctrination."
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Surviving and Thriving During the Global Pandemic of 2020
critical thinking. You have not been taught reasoning by analogy. When they took
the analogy section off the SATs, which they did on them maybe 10 years ago or
whatever, that told you all you needed to know, because reasoning by analogy is how
you solve hard, hard problems. This is what they teach in law, at least they used to
when I was in law school.
But if you don’t have the answer to a problem, you’re looking at a hard problem,
you don’t have the answer, it’s not right in front of you, it’s not even apparent from
the sources, how do you solve it? Well, there are a couple of ways to do it, but one of
them is to reason by analogy. Find another problem that’s close enough, see what
happened there and then bring it over to your problem and see if that works. That’s
what reasoning by analogy is. They took it off the SATs and stopped teaching it.
Why? Because people could actually... if you had that skill, you could solve problems
and see through the ideological indoctrination. And then, same thing with critical
thinking. So they took away the tools you need to know you’re being brainwashed,
then they brainwashed you. Then they turned you loose in society and now you’re all
over McKinsey and running for office and you’re the DA in Philadelphia.
It’s almost too late. I was thinking about the decline of the Roman Republic, not the
decline and fall of the Roman Empire, that took 1,000 years, but the decline of the
Roman Republic. And everyone says, “Well yeah, Caesar crossed the Rubicon, which
means basically he brought Legionnaires, brought his troops into the city and the
surrounding territory of Rome, which was absolutely prohibited. You could fight
all over Europe, but you couldn’t bring your troops into Rome, but Caesar did. And
then, he became a dictator and then he was assassinated. Then there was a civil war.
And then finally, Augustus became the Octavian, later Augustus became the empire.
Well, that took about 30 years, but the decline of the Roman Republic started really
100 years earlier in the late 2nd century with the assassination of two brothers who
were populous of the time, at least in Roman terms. So, that took about 120 years to
really rot from the inside. And I would say we’re a good 50, 70 years into rotting from
the inside and maybe we will.
But Evola is no different. Saying he was and atheist doesn’t go far enough, he was
actually a Satanist. Let’s call it a cultist. He dabbled in magic. And whatever you
think of magic… when you dabble with it, you lose. Meaning yeah, you can do it...
there is a supernatural world out there, but you better wait for it to come to you with
a good message, that would be God. But if you knock on the door with your own
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Surviving and Thriving During the Global Pandemic of 2020
methodology, you’re going to bump into another fellow called Satan and you’ll be
taken over by it, and that’s kind of what happened with Evola.
One of the things that makes these mass movements possible is the Modern
Monetary Theory, which is that the Fed effectively, just to keep it simple, print as
much money as they want. And as long as the US dollar is the reserve currency of
the world. Approximately 80% of debt in the global economy is priced in dollars.
So, as long as the dollar remains the reserve currency of the world, we can get away
with $26 trillion in federal debt or a $5 trillion deficit for a single year. Granted, these
are all in response to the pandemic, but still, that’s a tall order to figure out how to
finance all that debt.
There is another link within the Five Links that caught my attention recently, which
is this idea of The Great Reset. It’s like all of the countries, especially of Western
Europe and the Americans, are in debt. They have these massive debt loads that are
all priced in dollars. The world economic forum recently floated the idea that they
called The Great Reset. And to me, it’s a frightening concept, that all of the central
banks of the world would try to get together and devalue all the currency. I mean, I
can’t even imagine how they could figure out what The Great Reset would look like
on the other side. It sounds like a colossal mistake waiting to happen.
Well, you’re right. I mentioned earlier that in an ideological movement, the plain
meaning of words are the first victim, which is true. So what we have now, is that
there are two definitions of The Great Reset and they’re completely opposite. So, as
if things weren’t confused enough, why don’t
we have an important event and give two
opposite meetings and then let people figure it
out?
So, let’s just go back a little bit. The phrase,
The Great Reset, has been around for a while,
at least 10 years, maybe longer. There’s a book, I think it’s called The Great Reset by
a Dutch writer, Willem Middelkoop. It’s easy to find online. It’s been a bit of a best
seller. And I not only use the expression myself, but I certainly make forecasts and
do analysis that are in line with what is generally described as The Great Reset. And
what it means basically, is that people will lose confidence in the dollar. You will
need to come up with a new monetary standard, a global reserve currency of some
Addison:
Jim:
"What we have now is two definitions of The Great Reset and they're completely opposite. So, as if things weren't confused enough, why don't we have an important event and give two opposite meetings and then let people figure it out?"
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Surviving and Thriving During the Global Pandemic of 2020
kind. It could be gold. It could be the special drawing right, the SDR special drawing
right, that’s world money from the IMF. I call it world money. The IMF doesn’t call
it world money, they call it special drawing right because they don’t want anyone to
understand what they’re talking about, but that’s the technical name for it. But you
can think of it as world money.
People don’t realize the IMF has a printing press, the same as the Fed. The Fed
can print dollars. The IMF can print SDRs and hand them out in any quantity, and
they’re not confined to member institutions. The IMF, under their articles, could
print SDRs and give them to the United Nations to pursue a climate change agenda.
That’s actually in the articles of the IMF. And I mention that in my book, The Road to Ruin. So yeah, some kind of crack up of the dollar, followed by, fill in the blank,
some people say Bitcoin, some people say gold, a gold-backed currency, SDRs.
We can be pretty sure it will not be the Chinese Yuan, nobody wants them. It will not
be the Russian Ruble, nobody wants those. I mean, these countries might be able to
form bilateral trading relationships and say, “Hey, you got to take Yuan or whatever.”
That’s fine, but they’re not going to be global reserve currencies. The leading
candidates are the dollar, maybe the euro, the SDR and gold. And SDRs can be
digitized. You can have a crypto-digital SDR. I don’t think much of Bitcoin. I think it’s
a scam or maybe recreational gambling, if you like. But the SDR could be digitized
and there’s some effort along those lines.
So that crackup, followed by a new monetary standard is what people mean when
they say The Great Reset, until very recently. Now, just in the last couple months,
and you’re right, the World Economic Forum, WEF, which is the host of the Davos
Conference... People may not have heard of the
World Economic Forum, but they’ve heard of
Davos, that’s this nice ski resort in Switzerland
where once a year, all the great leaders of the world
gather and they talk about the future of the world.
They’re usually wrong, by the way you. Actually, if you study Davos closely and see
what they’re doing, just go out and do the opposite in your investment portfolio,
you’ll do very well. They get it wrong, but they do try.
So, they’ve decided that this year, the 2021, January 2021 Davos Conference, is going
to be about The Great Reset, but they mean something completely different. This is
"If you study Davos closely and see what they're doing, just go out and
do the opposite in your investment portfolio, you'll do very well."
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Surviving and Thriving During the Global Pandemic of 2020
really globalism 2.0. This is an effort by the elites to reboot and rebrand globalism.
Globalism means no borders, no tariffs, global capital flows, no exchange control,
world money, world domination, a world tax system. Again, I talk about all these
things in my book, The Road to Ruin. And I’m guided by, I think we all should be,
Rahm Emanuel’s famous comment in the early days of the Obama administration,
during the depths of the 2008-2009 financial collapse and recession, when he said,
“Never let a good crisis go to waste.” And they didn’t. They passed an $800 billion
stimulus bill in February, 2009.
I mean, $800 billion seems like small change compared to what we’re talking about,
$5 trillion, and you’re right about the $5 trillion. But $800 billion, as Everett Dirksen
said, it used to be real money. But most of that money did not go to shovel-ready
infrastructure. Remember shovel-ready? That was what they were talking about.
All that happy talk. No, it went, actually, a lot of it went to support municipal workers
who were going to be laid off, because the States can’t print money and had budget
deficits, and that was their constituency. A lot of it went to community organizers,
etc.
So Rahm lived up to his trademarks. And now the world elites are saying the same
thing, “Never let a good crisis go to waste.” We have a pandemic, we have a global
depression. We have very strained financial
situations all over the world. Why not use
that to pursue what? Well, Al Gore is going
to be busy... it’s going to be the Green New
Deal on a global basis.
But everything I just mentioned: world money, world taxation, turning corporations
from private enterprise entities that work for the benefit of stockholders into social
welfare conduits that do what they’re told by the government, etc. There’s a long
list of things, but the way to understand it, this is globalism on steroids, rebranded,
rebooted for the post-pandemic age, but they’re calling it The Great Reset. So right
away, when you say Great Reset, you have to say, “Huh, are you talking about the one
where the dollar collapses or are you talking about the one where Al Gore becomes
CEO of the world?” Because that’s what’s going on, number one. So you watch that
agenda closely. They’ll get it wrong, but when powerful people are screwing up, it’s
important to know about that because there’s opportunity there.
"Globalism on steroids. Al Gore is going to be very busy... it's going to be the Green New Deal on a global basis."
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Surviving and Thriving During the Global Pandemic of 2020
As far as the currency reset is concerned, here’s what’s actually going on. We can
cut through all the jargon and everything else, I’ll tell you what’s actually going on.
People who talk about the devaluation of the dollar don’t know what they’re talking
about. They compare it to... they use DXY, that’s a dollar index. Bloomberg has a
very popular dollar index. The Federal Reserve, that’s the one I use, they have what’s
called a broad trade-weighted real index. There are a number of indices you can use
and if you look at all of them, the dollar is getting stronger. And they say, “But aha,
the dollar is going to crash.” Well, not really. The dollar is getting stronger.
But when people say the dollar is going to crash, what they mean is it’s going to crash
against the euro. The euro is the biggest component in all these indices. So, you’re
talking about the euro-dollar exchange rate. The euro-dollar exchange rate goes like
this, and then it goes like this, and then it goes like this, and then it goes like this.
Currencies don’t go to zero; stocks go to zero, if the company files for bankruptcy;
bonds can go to zero, if the company files for bankruptcy. Currencies don’t go to
zero. At least, not major world reserve currencies don’t go to zero, they fluctuate. So
yeah, look for turning points. Look for momentum. You can trade them if you’re an
exporter. If you’re a bank currency trader, you really need to know, but they don’t go
too far out of bounds.
The point is, how can the dollar crash... People talk about dollar devaluation. Well,
if you have dollar devaluation, that means the euro is going up. What does that do
for Europe? It kills them. It kills their exports. It creates deflation in Europe. It makes
their debt burden worse. In other words, a declining dollar measured as a cross-rate
to Euro would destroy Europe. Do we want that? No. Do the Europeans want it? No.
So people who talk about one currency going down, never think about the fact that
that means another currency must be going up. And what does it do to that country?
Same thing with Japan.
So, the way I think about all the major currencies, they’re like passengers in a
lifeboat, in the middle of the ocean, where the ship sank. Okay? They got a certain
amount of food, a certain amount of water, not much. Now, you can distinguish
among the passengers. You can say, “Well, this guy is taller or this lady is smarter
or this guy is a better swimmer or whatever,” but they’re all in the same boat. And
there’s no way that one of them is going down without all of them going down. And
it’s mathematically impossible for all major currencies to devalue against each other
at the same time. That’s a mathematical impossibility. If one is devaluing, somebody
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Surviving and Thriving During the Global Pandemic of 2020
else has to be going up and they’re bearing the... This is what Currency Wars are all
about, that was my first book. And the currency that’s going up is bearing the burden
of imported deflation and reduced exports and reduced export-related jobs. Not fun
in a world that’s in a depression.
So, how do you actually devalue the dollar, if you don’t want to destroy all the other
economies by making the currency stronger? The answer is gold. Gold is the one
form of money that can’t be printed. All currencies can devalue against gold at the
same time, without any currency going up. What goes up is the dollar price of gold.
So gold is the only form of money, the only measuring tool against which all the
currencies can devalue at the same time. It’s the only one. What does that mean? It
means the dollar price of gold goes up. The euro price of gold goes up. Gold goes up
denominated in every currency in the world.
So, what I’m doing... People say, “Jim, is the dollar devaluing? It’s devaluing?” I say,
“Yeah, fast, but you have to look at gold.” Nobody looks at gold. I mean, yeah, miners
look at gold, gold bugs look at gold, but I look at the dollar price of gold as a cross-
rate, as an exchange rate, the same way you look at the euro price of the dollar or the
dollar price of euros. And when you see gold going from
$1,400 to $1,500 to $1,600 to $1,700 to $1,800, and the
gold people who are now going, “Yay! Gold is going up!”
I say, “No, gold is not going up, the dollar is going down.
You’re witnessing a massive collapse of confidence in the dollar, but you won’t see it
if you look at euros or yen, and you will see it if you look at gold.” And that’s The Great
Reset.
The true Great Reset.. It’s not mine, but it’s the right way to understand it. Nobody
really does and nobody looks at it.
Let’s move on to China. There was an act passed, I believe yesterday, or I’m not sure
it was passed, I think it was presented yesterday to tie America’s or the United States’
military interest directly to Taiwan. It’s called the Taiwan Defense Act, I believe.
And the Chinese, the Communist Party believes that Taiwan is part of the mainland
and they just annexed Hong Kong, that’s done. So we’re funneling our way into a
defense of Taiwan. We’ve been defending Taiwan since the end of World War II. And
there are some islands in the South China Sea that are in dispute right now between
"Yay! Gold is going up!" I say, "No, gold is not going up, the
dollar is going down."
Addison:
Jim:
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Surviving and Thriving During the Global Pandemic of 2020
the Philippines, Taiwan and China.
Talk about not letting a good crisis go to waste, it seems like there are, not just within
the Trump administration, but within the military-industrial complex, there are a lot
of people chomping at the bit to heighten tensions between China and Taiwan, and
have the US get right in the middle of it. I don’t have much to say about that because
I’m opposed to military adventurism of that kind, but it is going to play a role, I think,
in the election and also in our ability to manage the economy as we come out of the
pandemic.
The China-US story is maybe the most important story in the world. And we just
spent the better part of an hour talking about the pandemic and the economy and
US politics, and Neo-Marxist ideology and The Great Reset. Those are all important
things, I’m glad we went through them. But you could say that the China-US story is
actually number one. It’s not getting the attention
it deserves.
And you’re right, mainland China, People’s
Republic of China thinks that Taiwan is part
of China; they’ve just got this kind of rogue
government, but it’s really part of China. But
what people miss is that the Taiwanese these think that China is part of Taiwan. In
other words, they both think that they’re the government of the whole thing. Now, I
understand Taiwan is geographically smaller, but it has actually a higher per capita
income and better technology and a pretty good defense posture. So, we’ll see how
that plays out.
Addison:
"The China-US story is maybe the most important story in the world. And we
just spent the better part of an hour talking about the pandemic and the economy and US politics, and Neo-
Marxist ideology and The Great Reset."
Trust Us… We Went to MIT and Harvard
My father was in the 1st Marine Division and after fighting his way through the
Pacific in Peleliu and Okinawa he actually, in addition to other medals, he got a Cold
War medal, because he was in the occupation of China in 1946 in Chancen. As a kid,
that’s how I learned about hyperinflation. Later I studied the Weimar hyperinflation
in early 1920s very closely, but when I was a little seven, eight-year-old kid, my
father used to say to my buddies and I, if we wanted a case of beer, we had to take a
wheelbarrow full of Chinese money, the Yuan down to the depot to get the beer.
Jim:
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Surviving and Thriving During the Global Pandemic of 2020
And I said, “Wow, a whole wheelbarrow full of money just for a case of beer.” But that
was really almost as bad as Weimar, just didn’t get as much attention. But the point
is, the United States doesn’t want a war, but the question is, does China want a war?
And Taiwan is a treaty ally, you’re right, there was new legislation passed recently,
and more on the way. But we’ve had defense treaties... Their treaty ally had been for a
very long time, throughout the Cold War.
Now, I would say it should have been obvious 25 years ago, and I said so at the time,
but now it’s obvious even to the globalists, the people who are delusional like Jeffrey
Sachs and some others. The Chinese took off the mask. It was always a mask. The
mask was, “Hey, yeah maybe we’re communists. Maybe we have a few human rights
violations, but trust us we all went to MIT and Harvard. Give us time, let us proceed...
open up your markets. Let’s have cross investment. Let’s have shared technology and
sooner or later we’ll be just like you.”
And people like Jeffrey Sachs and Richard Haass, and Joe Biden for that matter
and Obama and others bought into this. They’re like, “Yeah. Chinese, they’re nasty
around the edges, but give them time, they’ll be just like us.” That was never going to
be true. It wasn’t true. It was a delusion that
worked for the Chinese. They’re like, “Yeah,
well, if you guys want to be fools, we’ll give
you all the rope you need to hang yourself.”
Meanwhile, China lied about everything
they ever did.. They lied about the entrance
criteria for the SDR, in 2016. They lied about the Hong Kong treatment effect in 1997.
They lie about everything, because they’re communists. They just lie. That’s what
communists do. So yes, they are communists.
I had people, I remember 20 years ago, say, “Hey Jim. You’re just imagining things.
Get with the program. Old Marxist’s, and they’re going to die out soon.” I said, “No,
these are 40 year old Marxists who are going to be around for 30 years. And they’re
real Marxists.” But they kept this mask on. They kept this mask of them, “We’ll be just
like you give us time.” What happened in the last year? They took the face mask off...
organ transplants on live victims without anesthetic, whose bodies are cremated,
sound familiar?
Genocide, sterilization, forced abortion. This new law in Hong Kong... By the way,
"They lied about the entrance criteria for the SDR, in 2016. They lied about the Hong Kong treatment effect in 1997. They lie about everything, because they're communists. They just lie. That's what communists do."
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Surviving and Thriving During the Global Pandemic of 2020
I’ve been to China many times and I’ve been to Taiwan and Hong Kong, but that’s
not what I’m talking about. I’ve been all over China. I’ve been to Wuhan. I’ve been
out in the countryside. I’ve been all over China. I’m not going back. And the reason
is that China has just passed a new national security law, which puts an end... In its
expression in Hong Kong whatsoever. But it applies across the board and it’s extra
territorial.
And what that means is let’s say you’re an American, so I’m sitting here in
Portsmouth, New Hampshire, I’m active on social media. I write for Agora Financial
and Paradigm Press. I do TV interviews, I do podcasts, I’m doing this presentation
with you. I criticize China all the time. In fact, I just did five minutes ago. And well,
I’m not worried about the Chinese arresting me in New Hampshire. But if I go to
Hong Kong, I compose... They say, “Jim, you have jeopardized the national security
of China by your repeated denunciations of our policies and our internal matters and
the communist party, and you’re on your way to Beijing. You’ll never be heard from
again.” That ability. That’s what the law says.
So why would I want to gamble with that? I wouldn’t. I’ve been to China. Got a nice
slideshow, lots of pictures, but I’m not going back. Not that lone place, I’d be an
easy target. The others will find out the hard way. We’re in a new Cold War. We are
decoupling... executive orders in the next couple of days. Factories are going to have
to move their manufacturing back to the US, or to a third country. You can move it to
Vietnam, or someplace else. But you got to get it out of China.
Huawei’s going to be shut out of all developed economies, or pretty much all
developed economy assistance. This is war. It’s not yet. Hopefully, it never will
be, but it is a financial war. It’s an ideological war and it’s underway. So don’t fool
yourself into thinking that he’s picking fights, but it’ll all be good. Now, this is where
the Biden thing is a big deal. Because if Biden comes back, it might be like flipping
a switch where all of a sudden, we resume this delusional partnership with China.
Leave it to a guy with early stage dementia to think China was a good thing. But that
could happen.
Probably one of the highest stakes’ consequences of a Biden victory, which is we
would drop the ball in terms of understanding. By the way, and just to be clear,
I’m talking about the communist party of China. I have friends in China. I met
wonderful people all over China, and I love Chinese culture and Chinese history and
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Surviving and Thriving During the Global Pandemic of 2020
ethnic traditions. It is an innocent party, but they rule with an iron fist. And it’s the
communist party of China.
If things continue to deteriorate with China, that’s going to have a further impact on
the US economy. You had mentioned earlier that we’re in a technical recession, but
that you believe that we’ll more fundamentally be in a depression. Meaning that it
could take many years to come out of it. And you mentioned 2025, that would be if
all things go perfect, we end up at a point at 0.4% growth, or something like that. But
that’s if things go well.
And we still feel the impact of the Great Depression of the 1930s through our
grandparents and great grandparents and the stories that come down through our
families. This is certainly going to be one of those times, I believe. I’m just going to
give you a few parting words, just to help people understand the difference between
the recession, what they see on the nightly news, or on Bloomberg, or that kind of
thing where they’re looking at technicals, versus the cultural shift that we’re going
through. And the likelihood of a sustained depression in the economy and what that
would mean for wealth preservation and how you position the future of your family
and what you expect your kids to be able to do. And even your grandkids.
Well, you pointed the thing out which is the difference between a recession and a
depression. So recession you have two or more consecutive quarters of declining
GDP with a few other bells and whistles. Increase the lower industrial capacity
utilization. There’s a group called the National Bureau of Economic Research, NBER
up in Boston. It’s basically academic economists, but they are the official arbiters
of when recessions start and when recessions end. So that’s what they do. They do
other things, but that attracts attention.
And they’ve already declared a recession. They said the recession was beginning, I
agree with that. I think that’s right. That’s what I said in my new book. And then they
came along and said, “Yeah, that’s when it started.” We don’t know, by the way, we
could have growth today. We could have growth in the third. My point is that it won’t
be very strong growth and it won’t come anywhere close to undoing the damage. But
technically, could I see, yeah the recession was over in the third quarter, it was a six
month recession? It’s possible, but that glosses over the fact that whatever growth
you get it’s enough to undo the damage, which is a bigger problem.
Addison:
Jim:
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Surviving and Thriving During the Global Pandemic of 2020
That brings us to the recession. Now, economists have banished the word
depression. We talked earlier about the meaning of words. Economists don’t use the
D word as I call it, because first of all, it sounds bad. Who wants to be the... But more
to the point, you can’t quantify. A depression is a lot more than economic statistics.
It’s a lot more than a couple quarters of declining growth. It’s behavioral. It has to do
with the velocity of money. It has to do with confidence.
Depressions can linger, as we saw in the Great Depression, lasted from 1929 to
1940. By the way, a good cocktail party trivia question. Everybody knows the Great
Depression started in 1929 with the stock market crash, when did the industrial
average regain the prior high? 1954. The Depression was over in 1940, but the
index did not get to the old high until 1954. It took 15 years to get back there. So if
you’re one of the people who say, “Buy an index fund, buy and hold.” Well, you will
probably be dead before you recover your losses. Same thing in commercial real
estate, by the way. That’s a depression. And the effects were multigenerational. As
a kid in the 1950s, I didn’t live through the Great Depression. My mother did, my
father did, my grandparents did, but I didn’t. But their depression era habits were
what raised me.
So my brothers and I used to take our American Flyer wagon up and down the streets
of our suburban neighborhood and collect tin cans and newspapers. And we didn’t
think it was like anything to do with the environment. Maybe it helped, who knows.
And you needed to recycle steel, so you could build airplanes and tanks, or whatever,
and newspapers could be recycled. And interest rates were 3%. Well, I guess they’re
back there now. But the point is these were inner effects. It wasn’t until the late
1960s, when the baby boomers came of age, that the consumer, party on, Woodstock
economy took over, but that was 30 years. And that’s a depression. That’s what
depressions are like.
It doesn’t mean you have 30 years of declining growth, or 10 years of declining
growth. That’s almost impossible, but it does mean that even when growth returns,
spending does not, velocity of money does not, inflation, changes that have
been made, do not return. You’re just in a new world. And that’s the best way to
understand what we’re in right now. So I don’t really care what the NBER does.
Again, my expectations, they’ll say the recession is over in 2020, depending on
how the reopening goes, which is not going very well at the moment. But it doesn’t
matter. We’re going to be stuck in a depression for a very long time.
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Surviving and Thriving During the Global Pandemic of 2020
We skipped over Modern Monetary Theory. That’s a big subject. And just to draw up
a footnote. You said that Modern Monetary says that the Fed can print all the money
they want. They say something different, but it’s important. They say the treasury can
spend all the money they want. And you sell bonds, and oh, by the way, if the bond
market gets cranky, the Fed can monetize the bonds and print money. So there is a
Fed connection there. But what Modern Monetary Theory really does, they take the
treasury and the Fed and they treat them as if they’re consolidated. And they merge
the balance sheet.
Now, that’s not legally how they’re set up, but who cares? That’s how they
intellectually, or theoretically think of it. And Modern Monetary Theory, I’ve studied
the works. I cover this in chapter five of my book Aftermath. And I also have a
section on it in my new book. And Professor Stephanie Kelton, of Stony Brook
University of New York is the big brain behind all of this. But she says things like,
“How would people get money if the treasury didn’t spend it?”
Now, I know there are good answers to that question, but that’s what they say.
They go, “We should be spending money? It puts money in our pockets directly.
How could we get money if the treasury didn’t spend it? And Oh, by the way, don’t
worry about it, because the Fed can print up, buy as many bonds as they want.” So
they merged the treasury and the fed. They don’t show. And honestly, if you have
confidence, it doesn’t matter. The US is taking the plunge from 105%, to 130% debt to
GDP ratio. That’s what’s going on right now... 50% and go that high.
Now, there are good answers to this, by the way. And I think Modern Monetary
Theory is one of the great intellectual frauds of all time, but it has a lot of appeal,
because it gives people what they want, which is free money.
Show me a politician who doesn’t want to spend money. And it used to be, the
debate was, “Well, I want to spend money on free healthcare, free childcare, Green
New Deal, forgive student loans. Well, we can’t afford it. I hear you, but we can’t
afford it.” But now the rebuttal is “Yes, we can.” Which is just printing money. And
they’re doing it. And nothing bad is going to happen. Sure we have a pandemic and
a depression, but we don’t have inflation, and the bond market’s still functioning, so
show me something bad that has happened?
Well, that’s a very enticing view. It’s actually difficult to rebuttable. I can rebut it and
30
Surviving and Thriving During the Global Pandemic of 2020
I’ve done so, but it’s not a rebuttal you hear from very many people. And it’s not one
that politicians understand. And if they don’t understand Monetary Theory, they’re
enabling it. What they’re doing is MMT, whether they call it that, or not, whether
they understand it or not, that is what they’re doing. But what the MMT people are
missing, actually everything they say is correct, it’s what they don’t say. It’s what they
don’t deal with, where the flaws are. Starting with the fact that the limit on fed money
printed with debt to GDP ratios, balance sheets, or law. It has to do with confidence.
And confidence is very fragile and it can be lost in a heartbeat. And when you lose
it, it’s impossible to regain. So we’re in a situation where they’re very far along in
destroying competence. There may not be a legal limit on the fed balance sheet, in
fact, there isn’t. But there’s an invisible confidence boundary. And you don’t know
it until it’s too late. When you cross it, you have an immediate meltdown, but then
it’s too late to do anything about it. And that’s the biggest flaw. There are other flows.
Again, I talked about it in my book Aftermath. But that’s the biggest one. So yeah,
we’re heading for a crackup, a big one, but not yet. This can go on for a while before,
before it all comes tumbling down.
Well, Jim, I ranged far and wide. We did our virtual Five Links today. I want to thank
you for sharing your ideas with us. As usual, the interview will be posted and then we
publish the transcript too. So if you want to go back in and take a look. Also, I want to
point out that gold, if the forecast is correct, the dollar price of gold will go up as the
debt makes its way through the economy and through the different currencies of the
world. We’re expecting gold, the bulk price to rise.
And as we’ve been saying over and over again, during the pandemic, the best way
to buy and sell gold is with the Hard Assets Alliance. We provide a link on a regular
basis for you to open an account. Opening an account is free, and then you fund
it and you’re trading your own money. It’s a very easy platform to use, and we
recommend it highly. Jim, I want to thank you. Looks like a fairly decent day up there
in New Hampshire.
Yep. Looking forward to enjoying the rest of the day. Thank you for having me… it’s
good to be with you.
Yep. I’ll talk to you soon.
Okay. Bye-bye.
Addison:
Addison:
Jim:
Jim:
31
Surviving and Thriving During the Global Pandemic of 2020
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