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asset prices are going to collapse um companies are going to default investors are going to lose money there's no way around that it's just impossible uh to to avoid that a lot of jobs are going to be lost now a lot of jobs are going to be gained too but you know jobs are going to be lost I mean we have to lose the wrong jobs to create the right jobs if people are employed in areas where they shouldn't be you know that labor needs to be free up freed up to be reallocated to where it needs to be no interest rates have to be much higher now what does that mean a lot of defaults a lot of bankruptcies but of course it's going to encourage savings which will finance capital investment again I mean the economy Will Repair the government is going to have to slash government spending so obviously if you're dependent on that spending it's not good for you if you used to get a big check from the government and now you get a much smaller check or you get no check at all you know that's going to be a big deal I mean I think doing the right thing is going to require substantial cuts to Social Security you know so a lot of people are not prepared for that but that has to happen now if we don't do that then the Social Security benefits are going to be worthless anyway because inflation is going to destroy them you know so I think you know a measured approach to cutting uh um in Social Security and maybe means testing it is much better than just wiping out everybody's benefits equally through inflation so we're going to go through pain one way or another at least the pain that we would go through with me you know you know call it the shots would be constructive pain it would be pain that would eventually lead to gain but the course we're on now is just going to be pain followed by even greater pain you know so we need to do the right thing and if we could make government much smaller and we could eliminate a lot of the government I mean I would like to liberate the people from having to pay the income tax I don't want any personal income tax I don't want any corporate income tax I mean I don't want people to have to waste money and time calculating the income tax and and keeping track of it I don't want people rearranging their Affairs you know or spending time trying to avoid taxes I want them spending their time in their resources trying to generate income not try to Shield it from from taxation we need to go back to taxing consumption we need a you know tax system that taxes people when they spend their money not when they earn their money that's what the country was founded upon that was a basic principle that existed until 1913 and I want to go back to that and that would be a major Boom for the U.S economy and of course you know if I was President there are so many regulations that I could eliminate with the stroke of the pen that would immediately uh free up uh a capital and allow for American Business to be much more efficient and much more productive and money wasn't that wasn't wasted on complying with all these ridiculous regulations that money could then be used productively in the real economy so look I I think capitalism is a very Dynamic economic system and I think it has the ability uh to deliver substantial gains in in standards of living and it worked in the 18th century or rather the 19th century very well unfortunately we didn't have it for most of 20th century but if we can go back to it it can work even better in the 21st century than it worked in the 19th century and it worked great in the 19th century well I think the market would take them down a lot more than that I mean at least most assets there might be some assets that would increase in value and I mean I think that you know they would but obviously you've got a lot of companies that have crazy earnings you know huge multiples that would crash 50 there's a lot of companies that would go to zero a lot of companies that have a lot of debt and no earnings they would they would go bankrupt but also if I own a piece of real estate that goes down in value but stocks go down in value too well if I want to you know sell my house and buy stocks I mean maybe it's a push right because everything has gone down uh in in in value but you know we're living in a huge bubble and the bubble has to deflate and you know if you've been getting rich off that bubble you know you got a problem as the air comes out you know and and that's why there's you know a big vested interest in in continuing this but you know if I had been resident 20 years ago or even 10 years ago and had I been able to do the right thing then assuming you know I can get the right thing through Congress I mean I wouldn't you're not making me King you're just making me president so we'll see if I could actually get anything done but I mean I would try my best I mean I would veto every budget you know that was not balanced I mean I would force these massive Cuts uh and I would you know level with the public I do a lot of talks to try to you know educate the public to understand you know the mess that we're in and and how big the stakes are and why we need to to do the right thing uh High inflation is going to be part of the American Experience it's going to be a way of life and of course businesses are going to have to figure out how to deal with it and of course that's going to make American Business even less efficient than it is now uh we're probably going to end up having a larger underground economy which is probably one of the reasons that the IRS is gearing up with 87 000 more agents because as more people operate in the underground economy uh you know they may be not paying as much taxes as the IRS you know would like and so that's probably why they want more agents out there to go after you know the small businesses and self-employed workers who you may end up being forced into the underground economy well I think the dollar has risen based on the false expectation that the FED is going to win its fight against inflation and that to win that fight it's going to raise interest rates and those higher rates are helping the dollar but I think the markets are wrong I think the FED is going to surrender inflation is going to win the fight I think the FED is going to ultimately pivot that Powell is going to turn his attention from inflation to the economy that the FED is going to go back to stimulus because the recession that we're already in and that so many people are denying is going to get much worse we are in danger of an actual financial crisis If the Fed continues to raise rates which it may and if that crisis hits the FED is going to go back to the QE well uh not only by trying to cut rates but by you know printing more money to buy up more bad debt but unlike the last few times they did that the FED is going to be doing that with inflation already very high so what what the Fed was able to hide behind with QE one two and three and even qe4 was that inflation was still below their two percent Target and so therefore they could still print a lot of money and even if inflation went up well that wasn't a risk that was actually a benefit that was enabling the FED to kill two birds with one stone help the economy and achieve their two percent inflation a Target which never made any sense to me and I called and fed out for that lunacy and you had the same thing in Europe and in the UK they kept saying we don't have inflation we need more yeah we needed more inflation like a hole in the head and now now we've got it right but I knew that that was just a bunch of nonsense but if the FED tries to go back to zero percent interest rates If the Fed tries to go back to QE with inflation at six percent or higher you know right now it's still eight and a half but if inflation is triple two percent you can't justify throwing gasoline on an inflation fire and so when the FED does that I think the dollar is going to burn to a crisp I think the world is going to recognize that inflation is going to go on forever that the balance sheet is going to expand forever and then and the bottom is going to drop out not just of the US dollar but of the U.S treasury bond market and when bond prices start to crash that's when the FED is going to have to really up the size of QE because the FED is not going to let the bond market crash the FED is going to stop that crash by buying those bonds itself well where is it going to get the money to buy those bonds it's got to print it so it's got to create more inflation to buy bonds but the more inflation the FED crates the more people who own bonds want to get rid of them so it's a self-perpetuating spiral and it just ends in a dollar crisis and this is what the Federal Reserve is getting so wrong once again they are driving looking in the rear view mirror completely oblivious to what lies ahead because they're looking at the economy they're looking at all these jobs in this low unemployment rate and what they don't realize is that all these jobs were a function of the free money that they're about to take away the zero percent interest rates and everything that came around it the housing bubble the stock market bubble all that paper wealth and the effect that it had on consumption unemployment all this is about to go away the FED is about to pull the rug out from under everything it built and it's all going to come collapsing down it's just the FED once again doesn't know the difference between a bubble and legitimate economic growth it thinks we have a real economy it thinks there's legitimate strength there that's why Powell is confident that we can raise interest rates to fight inflation and everything's going to be fine it's not going to be fine because number one yes we can raise interest rates but we're not going to raise them high enough to fight inflation but we will raise them high enough to cause a recession but not just a recession a depression a financial crisis that is worse than 2008 that's what the markets don't seem to get because I think the reason you're seeing this weakness in gold and silver stocks and some strength in the dollar is because the markets believe that the FED is going to fight inflation and they're going to be aggressive but they don't believe it's going to result in a severe recession they certainly don't believe it's going to result in a financial crisis so the markets still believe that the FED can do the impossible so what's going to have to happen to turn this Dynamic is investors are going to have to figure out what's going to happen now either they're going to figure it out on their own or the FED is going to tell them now my guess is that the markets will sense the fed's pivot it before the FED actually pivots so I think at some point you will see a move up in gold and silver a big move up in these mining stocks and a rollover in the dollar now those two things may happen at the same time a decisive move up in gold and break down in the dollar in particular if these things happen with the bond market continuing to fall meaning long-term interest rates rise we see Rising long-term interest rates a falling dollar and a rising gold price simultaneously that will be proof that the markets have figured it out and they figured it out before the FED admits it now if they can't figure it out and the FED surprises everybody with its pivot then the markets are still going to make that move they're just going to make it later and in a more spectacular way because at some point the Federal Reserve is going to recognize that its fantasy of successfully fighting inflation while not hurting the economy just didn't happen and at some point you're going to see a wave of layoffs because once you raise interest rates you completely change the nature of the economy as I said all these industries housing Autos technology retail are going to be hemorrhaging jobs and all at once so we're going to go from a very low unemployment rate to a very high unemployment rate in a matter of months maybe just one or two months you're going to see massive job losses that are going to completely surprise the fed and it could easily happen this quarter and if we get big job losses this quarter then we're going to have a recession because we already have one quarter of negative GDP if we punctuate it with the second quarter of negative GDP we're in a recession
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