저자: GeorgeGammon · 외국인
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장단기 금리차(수익률곡선) 역전과 경기침체의 관계를 설명하며, 2년물 금리가 급락해 디스인버전(역전 해소) 조짐이 보이고 이는 강제착륙(hard landing) 신호라고 주장. 인사이더 정보가 채권시장을 주도한다는 해석을 제시. 실제 자산 투자로는 현금 확보와 금·단기 국채 보유, 수익률곡선 정상화 후 대응을 권함.
다듬은 글
It doesn't come with more government. It comes with less government. Denied, denied, denied. This is with 0% interest rates. It is distorting the ability to create more goods and services. Instead of betting long- term on the 10-year one, he actually leveraged the 2-year one. I never try to predict the direction of prices.
Never, never, never. The information he receives and does not share with the general public is not good. It risks a re- acceleration of inflation. He also risks becoming like Arthur Burns. He hit the nail on the head. It's all about insider information. interviewing and confronting George Gammon. Thank you so much for being here.
You know, George was there for me when I was in court in California trying to fight Governor Gavin Newsom, and you were backstage in the waiting room ready to testify for me. That's how it is. Thank you for that. No problem. But now you have a big warning. And thank you. Something strange is happening in the economy right now, and you just talked about it live.
Bring us up to date. What, what's going on? Well, it's all about something called the performance curve. So, for your viewers, I'm sure they're probably somewhat familiar with this, but we look at Treasury Bonds. And you have the Treasury at 1 month, and that goes up to a Treasury at 30 years. So, this is what we would call the Treasury curve.
And what we have seen historically is that when you invest, what it means is that long-term interest rates are actually lower than short- term rates, which is the opposite of what they should be. TRUE? Because if I'm going to lend you $1,000 for 2 weeks, sure. I'm going to charge you a much lower interest rate.
Maybe he'll even do it for free. Correct. And let's compare that to if I lend you those $1,000 for 30 years. Well , listen, I have a lot of risks. I am at risk of inflation. I have counterparty risk. And therefore, I'm going to charge you a much higher interest rate. So, that's why you almost always see much higher long-term interest rates.
TRUE? It's the same as when you go to the bank and you have an adjustable-rate mortgage; well, that will have a lower interest rate than if you have a 30-year fixed-rate mortgage. It's exactly the same concept, okay? So, what happens is that when the 10-year Treasury yield falls below the 2-year yield, for example, this has always been a warning sign.
And what we have seen since 1950 is that almost every time there is an investment, it precedes a recession. Or in today's terms, a forced landing. How did they achieve that in 19? We had the investment in 2019. The bond market couldn't have predicted COVID, so would there have simply been another recession?
I think so. Oh. Yes, there are two, there are two ways to look at that . But it's a big point, because the question is, okay, if the inversion of the curve has been so accurate, how? Yes. How, how was it so accurate ? Right? And I think you hit the nail on the head . Everything, everything is about inside information .
Oh my God. And I just spoke to Jeff Snyder about this. And it makes perfect sense. And I think we can use Kenny McElroy, who was here recently, as a perfect example. So let's analyze this thought experiment, shall we? In 2019, the curve reversed in August. Yes. Yes, it was around summertime. Correct.
So, if you look now at all the reports of when we probably had that leak from Wuhan. the lab, if that's what happened. Yes. Yes, of course. I try to keep it, I try to keep it YouTube-friendly here. Come on, man. It was, it was the bat, brother. Correct. But assuming that happened, current reports, including those released by politicians in government, place it in August 2019.
So, let's think about this carefully, shall we? And this is the way in which , no, in no, people were already getting sick then in China. You're right. Of course, because they had those games, the military games. Or the military games were supposedly the first, you know, superspreading event , if you want to call it that.
So, it would have had to come out before that, which puts it right around August or so. So, and you know this well because of, you know, your attempt at politics there , it's all about people with inside information and they have access. Gavin Newsom, you know, we talked about this earlier today, he has access to all the bankers in California.
Is that why the FDIC bailed out Silicon Valley Bank? Well, I think so, but we are, we are reaching a very crucial point here. So, let's think about this. An example of a person with financial insider information would be Stan Druckenmiller, Warren Buffett, Paul Tudor Jones, something like that, right?
So, George Soros, another great example, right? So these guys have a lot of connections, obviously, all over the world, and specifically in China. So, let's think about this. If it's true that this was leaked from a lab, that scientist who knows what happened and how bad it could be is going to call the local politician immediately.
TRUE? That politician is going to call the next person on the line. It is very likely that the next person knows many bankers. Ha ha. Those bankers probably know George Soros or they know Paul Tudor Jones. So what they're going to do is call Paul Tudor Jones and say, " Dude, you really need to pay attention to this." So what is he going to do?
He's going to hire or pay one of his research analysts to go there, specifically to Wuhan, and talk to that scientist. TRUE? So, his research analyst, or whoever works for him, is going to go there, talk to the scientist, and when he talks to the scientist, he'll call Paul and say, "Dude, this is real." "It's like this could end the world." My God.
So, if you're Paul Tudor Jones, what do you do? Purchases of Treasury bonds. Purchases of Treasury bonds. Because you're going to buy the safest and most liquid asset available, which, whether we like it or not, is the United States Treasury, more specifically the long-term yield curve. So why would they buy long-term on the curve?
Well, you know this, your viewers may not, but if interest rates fall by 1%, prices will rise much more if you have a 30-year bond compared to a one-month bond, right? So whether you're looking for capital appreciation, or just protecting your portfolio, you'll get much more benefit the further you go down the yield curve.
Then, all sorts of people like Paul Tudor Jones start buying on the long end, which makes interest rates fall more than the federal funds rate , because they expect lower growth and lower inflation expectations. It goes back to Irving Fisher, doesn't it? In the 1920s and 1930s. And so, that's what this is all about .
And in my opinion, that's why the curve has such great predictive power . It's because they, they simply trade in insider information. TRUE? And that's why it's always correct. So, another example I use is our good friend Ken McElroy, or even you, do you know, how many properties do you own right now ?
Oh, we just started a real estate fund. I think that now, in total, we'll have about 45 or 50 units, or something like that. Very good, fantastic. So, fast forward 10 years, and I'm sure you'll be as successful as Kenny McElroy. Right now, Kenny has $1.5 billion with "M" under management. Let's assume for a moment that you have 100,000 apartment units, okay?
Well, if anyone has inside information about what's happening with rentals, it's Kenny McElroy. TRUE? Let's suppose for a moment that there is an ETF with which you can short sell national rental rates. You can bet on low rental rates. So, if Kenny, with all 100,000 units, sees that rents are going down, he can no longer rent the units.
He needs to lower the prices. Occupancy is falling. He sees all of this in real time. He has that privileged information that is legal, but that Wall Street does not yet possess. And they definitely only listen to CNBC headlines that say, "Oh, the economy is booming and rents are rising." Correct. And that's not what I'm seeing.
So I'm going to go out and cover the portfolio of multi-family properties that I have. And I'll do it by buying that ETF that increases in value when rents fall. That is effectively the 10-year Treasury yield. That's incredible. TRUE? That's the 10-year Treasury bond. That's the equivalent of the ETF you would buy to benefit from falling rents.
So, what have you seen today? What we have seen today is that the 2-year Treasury yield plummeted. And when I say collapse, I mean it has dropped perhaps 10 or 15 basis points. And I believe that, at today's lowest point, it reached close to 4.1. Which is huge, because just 2 days ago it was at 4.35.
25 points. So that's a drop of 25 basis points in 2 days. Now, most people would see that and say, "Oh John, I mean, in percentage terms, it's not a big deal." But they need to realize that the Treasury market is huge. And what is it that is also abnormal, in other words, that movement. Absolutely abnormal.
And what makes it even stranger is that there's no news. Uh-huh . Today's PPI came out, which I think was a little lower, but that's not it. And yesterday's CPI was a little higher, so it's like... Right, so it's like a tie. Yes, exactly a tie. so it wouldn't really explain the 25 basis point drop. Now, what has happened because of that 25 basis point drop is that it has gotten very close to the 10-year Treasury yield, because we all know that the curve has been inverted for the last, you know, let's say 18 months or so , right?
So what's happening now is that we're seeing that disinversion of the yield curve where, well, it's moving like this. So, the two- year bond is going down, down, down, down, down. The 10-year-old is declining, but at a slower rate. So why is this important ? Because historically, what we have seen since the 1950s is that it is true that the inversion of the curve has preceded every recession we have had, but we do not usually have the recession when the curve is still inverted.
We have the recession after the curve inverts . And we're about to do it. So, well, we've gotten much closer in the last 2 days. And it seems that divestment is going to happen. I mean, who knows? Maybe in the next 2 weeks, or next month or so. And why that's important for retail investors is that they realize that once that curve inverts.
Now, what we also need to talk about is the "bull steepener" versus the "bear steepener". Which we were discussing earlier. Because that would be a strong indication that we are either confirming the action or denying it. So I want to delve deeper into that. If I can, I also want to get back to this.
Is it possible that the 10-year bond is falling because people are convinced that rates are going to go down , so they want to lock in those rates for a longer period? So, are people buying more of the 10-year bond than the two-year bond, or could there be a logical explanation other than the recession?
Um, well, let's think about that because long-term interest rates are expectations of future growth and inflation. Which appear to be low now. Correct. Let's suppose for a moment that the 10-year Treasury yield is falling simply because people believe the Fed did a great job and rates will come down.
Correct, exactly. And that rates are falling again, or rather, that the CPI is falling back to 2% . That's the goal. Mission accomplished. Mission accomplished, that's right. Therefore , the Fed will lower rates, let's say to 3.5%, we have an unemployment rate of 3.5%, and that will allow the economy to continue growing.
The stock market is at all-time highs. This is more or less the narrative we see. TRUE. Okay, in that scenario it's true that inflation would go down, but what would happen to growth expectations? Well, I suppose in the long run it would probably stabilize lower. Well, expectations for future growth would increase.
Ah, so you mean you're avoiding a recession? Sorry, I thought that by lowering the 10-year yield, we might not see the 5% GDP growth we estimated last quarter. But there are two components there. There are two components. What we need to compartmentalize are growth expectations and inflation expectations.
So, what you're saying is that inflation expectations are falling again, right? To 2%. And this is what allows the Fed to lower rates from 5.25%, let's say to 4 or 3.5%, something much more accommodative. The real rigidity remains the same, so to speak, as those inflation expectations... But those interest rates would be more accommodative, let's say, for the real economy.
Now, suddenly, people can get mortgages at a cheaper rate. People can borrow money for cars at a cheaper rate. Now, pay. Yes, they can do all these things and it really relieves a lot of pressure on commercial real estate and maybe some of the banking issues we saw in March 2023 and so on. So, in that scenario, it is true that the Fed could lower rates if inflation moves closer to its target again.
But what will also happen in that environment, theoretically , is that growth expectations would also rise. Correct, correct. Okay, I understand what you mean . Yes, yes, absolutely. So, it's not just one thing or the other . It's a combination of both. Do you see it ? So, if yields are falling, which is what we see in the 10-year Treasury, and remember that we talked about the 2-year Treasury plummeting.
Well, 10-year Treasury yields have also fallen, just at a slower pace. Okay, okay. So, your argument, to simplify it for the viewers, would be: what we see now is that the 10-year one is going down while the 2-year one is falling. But wait a minute, if we thought the economy was about to take off, we would think that the 10- year one should go up.
Exact. Now, a counter-question would be, what if people believe that the economy will take off with near-zero inflation? Just to take the argument to the extreme for a moment. If people were to think, well, we'll have a strong economy with maybe 2.5% growth or whatever, with inflation at zero or half a point below the Fed's target, could you see both yields fall in that case?
Yes, what you would see there is a performance curve with a good upward slope. You would see a normalization. Yes. Which is what we are tending to return to now. No, the 10-year one is going down. Remember the 10-year-old... Both are still going down, yes. Yes, I mean, just a couple of months ago, the 10-year Treasury yield was above 5% and now it's at 3.9%.
Did you see that play? Do you know Bill Ackman? He...did what? He's been complaining that the 10-year one was going to rise above 5%. So what he did was aggressively short Treasury bonds and talk about it nonstop on social media. Yes. And he said: "It's going to far exceed 5% ." That's what he said.
As soon as it reached 4.9, "Wow, this is an opportunity." Close positions and go long in bonds. Oh, clever. Well, I think he made his move. Yes. I think it's better to listen to Druckenmiller than to Ackman. But if you look at what Druckenmiller did, I think it was really brilliant in terms of that operation.
And what he did, instead of going long on the 10-year bond, was to go long with leverage on the 2-year bond. Ah, because I expected the 2-year bond to fall much faster, the yield, and therefore the bond price to rise. Not only that, but he also saw a bit more risk in the long term due to the deficits and the supply of Treasury bonds.
That's a good point. So that was truly brilliant, as you would expect from Druckenmiller. Yes of course. Yes, but we're back to the same point: if the market, the bond market, was expecting a "soft landing" scenario with what you're saying, the 10-year Treasury yield would rise as the federal funds rate falls.
Clear. Therefore, you would reach that divestment with the short part perhaps going down slightly, but the long part going up much more than the short part; So, let's say the federal funds rate is around 4.5%, right? And that would mean a cut of 75 basis points, and that's what they're saying , three cuts right now .
Clear. But then the 10-year Treasury bond would n't drop to 5 or whatever. Yes, the 10-year Treasury bond would not fall to 3.9%, it would go from 5%. You know, even higher. It would continue to rise, perhaps to 6 or 6.5% if it projected even lower inflation, but much more growth. That's interesting.
So perhaps a more normal curve might look like this . Okay, federal funds, the two- year one aligned with that. You have four and a half, let's say six and a half in the 10- year-old one. Yes. So we have a differential of two here. The 30-year-old would be taller. Yes, exactly, even higher, exactly.
So you have your normal performance curve. Now then. And if it were inflationary, let's talk about whether it was predicting a "no landing". OK. with a reacceleration of inflation . Alright . Then you would see it even more pronounced. That curve is even more pronounced. Okay. Then, the 10-year-old would skyrocket.
Clear. because now you have higher growth expectations and, in addition, higher inflation expectations. So, as you mentioned, the normal range would be, let's say, four and a half to six and a half. Is there a possibility that we could go to one extreme and lower both sides to 4%? And then you have half a percentage point in the two- year one.
And two and a half in the 10-year-old. And that's what we're heading towards. Correct. So it's always possible. You know, I like to remind people that there are no certainties. That 's fair. in this world. There are only probabilities. What would that mean? Inflation? Uh , no. No, what I mean, what you 're talking about there is, uh, first of all, what is the Fed funds rate at , 5.25%?
to go to zero. Yes, well, it would have to go down to, uh, let's say the 10-year bond goes below 3.9, because when the Fed lowers rates, I don't know if there has ever been a time in history when the 10- year bond has gone up, you know, directly while the Fed is lowering rates, because usually, when the Fed lowers rates, it does so to prevent.
a recession. Uh, a recession or crisis, right? They're always behind the curve. Ah, definitely. I think if they fail here with employment and we start to have a self-fulfilling cycle of layoffs , we're headed for a recession. And remember that employment is always a lagging indicator. Super late. That's the problem.
Once that happens, it's too late. Yes, if you really look at the LEI, which is the leading economic index, and I think it was the Conference Board or something like that , I forget which entity publishes it, but you see that when it reaches minus four, we have always been in a recession, not just predicting it.
And now we're at minus eight. And then, if you look at GDI compared to GDP, we see that G... in fact, I even made a video about this the other day. The Fed... I went to their website and saw a report they gave in 2016, where they themselves argued that the GDI was a much better predictor of economic growth or recession than GDP itself.
And right now you have a negative GDI and a rising GDP. There is...there is...there is a difference there. Clear. TRUE? And the only time we've seen that divergence between GDP and GDI was just before the Great Financial Crisis. Wow, that's quite a drop . That's not even what they call a mild recession.
Yes, but another thing I think viewers should consider is, you know, this whole Jerome Powell twist thing. Well, I think we should ... and a lot of people assume that, hey, well, if interest rates are going down , well, that will be fantastic. That will be great for the economy. That will be great for the stock market .
But what they forget to ask themselves is: why are rates falling ? Well, Jerome Powell's argument would be that inflation is going down. That's right, exactly. But let's think about that for a bit. OK. If you are Jerome Powell, you are 65 or 70 years old and you have 100 million dollars. The only thing that really matters to you right now, your number one priority, would be your legacy.
Yes, your reputation. Absolutely. Exact. So, you know that history will remember you in two ways. Like Arthur Burns or Paul Volcker. Yes, you are...No, well, or you will be... A hero or a loser. That's how it is. Yes that's how it is. Simple. So, you want to be Paul Volcker. Yes, exactly. You don't want to be Arthur Burns.
Arthur Burns is not the...I said Aaron, my bad. I'm sorry. No problem. You don't want to be Arthur Burns, do you? So, let's think about the scenarios here. You have a hard landing, a soft landing, and no landing. The interesting thing is that, if you look at the incentives, Jerome Powell has every incentive for a hard landing.
That? Because, well, if we have a forced landing, history will remember him as Paul Volcker. The one who solved inflation and then comes and bails us out. Well, he solved inflation by causing a recession. TRUE. Yes, exactly. But that's terrible. It's... The story is reminiscent of Paul Volcker. He had the courage to do what no one else wanted to do and made the difficult decisions to raise rates enough to end inflation, even though it caused an economic recession.
That's how it is. Now, right or wrong, that's how history remembers Paul Volcker. But it's also scary, because it creates that hardship of unemployment and... It does, but let's look at it through the lens of legacy. Yes. Yes, that's right. Just for a man who, after all , is a human being and is imperfect like any of us.
So, do you think he's incentivized to cause a recession when...? But back then we had very high inflation expectations, which we don't have today. But wait. Okay, now you 're getting to the next point. So, that's the forced landing. Paul Volcker, if we see him through that lens, is remembered as a hero.
Yes. Okay, we agree. Yes. So, with a soft landing, he'll most likely be remembered as a hero too. But the risk lies in the "non-landing". Because by not landing, what is at risk is a re-acceleration of inflation. And if he risks a re-acceleration of inflation, he also risks becoming Arthur Burns. Yes.
Yes. Yes. So let's assume for a moment that that's its main driving force. Yes. Don't be Arthur. Don't be Arthur Burns. Then you have to ask yourself, what would it take to change course if inflation continues to be above your 2% target? TRUE. TRUE. TRUE. In annual terms. Yes. With that in mind, in my opinion, it means that the information he receives and doesn't share with the general public isn't good.
I agree. Because you 're basically arguing that he sees that weakness in small business contacts, that insider information . Call the Warren Buffetts, the business owners, the proprietors of whatever, all the inside information . He's on the phone saying, "Oh, maybe we've gone too far." Yes, and they have the Beige Book.
I don't know if you 've made a video about that, but the most recent Beige Book, and if it's their way of surveying and talking to people. Yes, with regional banks. It's their survey, so it's all anecdotal, but that's the insider information you're talking about. And if you look too. If you look at the...
Well, but did you see the summaries? Oh, of course, every area, New York, Philadelphia, but sure, yes. Exact. If you look at the most recent summaries, they all say, "It's getting bad." He's getting sick. That's pretty much the summary of each of these regional banks: that unemployment is rising, or the unemployment outlook is changing .
So when you combine that with the LEI, I also think that Jerome Powell is looking at other markets. Yes. Because we have to understand that this is a globally connected economy . And that the probability of us having a recession in Europe, one in Japan, one in China, and somehow not here. Let's avoid a recession, yes.
That probability is incredibly , incredibly low, yes. Because of how global the economy is right now. And I would say that's because of how global the monetary system is . Right ? Because we need to understand Yes, liquidity Banks create liquidity. Right ? So, if you have a problem in the global banking network that we call the Eurodollar system, and if that problem is created by China, well, that's still going to affect the United States economy.
You say, "Well, George, why should we care about liquidity?" Well, ask Silicon Valley Bank if they care about liquidity. Do you see it? Yes, well, and Jerome Powell turned on the money printing press for that pretty quickly, huh? Well, they...look at the BTFP. That's another great point, isn't it? Yes, direct, what?
130, 40 billion now? And it's going straight up. And they...and they say it's because of an arbitration. Oh, is that the explanation they're giving? Yes, so what they're saying is because the interest rate on the BTFP is some esoteric spread. I think it's the one-year swap spread, something like that .
In that respect, yes, yes, it's fine. And it is...so, it's that interest rate plus 10 basis points. That's what the Fed is charging for the BTFP. But in the IOR, which is what they pay on bank reserves, it remains 5.25%. So what happens is inflation, or excuse me, when interest rates, the expectation for Fed funds, goes down, now suddenly in November, there was this arbitrage opportunity because the BTFP rate dropped to, let's say, 4.9%.
But they could still get 5.25 at the IOR. So why not just borrow from the Fed, deposit the funds there, and keep the difference? a one-year loan. And so, uh, and the program also expires soon. So , you might as well take advantage of it. Now, the question is, and this is a question for you, are they simply going to extend it?
Because they probably won't demand full payment at that time. And then you're going to have another banking crisis. Jerome doesn't want that. I completely agree. Well, if I were worried about inflation, that would be one way to address it. Yes, simply to collapse the banks. Yes. It's crazy to think they have the power to do that, but yes, but let's focus, because I want to focus on that just for a moment.
Because if you listen to the mainstream media, you'll hear that it's all about this arbitration, which might be true. But the reason I'm skeptical is because when Silicon Valley Bank, First Republic, and Signature—and let's not forget Credit Suisse—when they all went bankrupt in March 2023, they created this BTFP, and usage skyrocketed to about $60 billion all at once .
2 weeks. Yes. And so, what one would expect, if you listen to the mainstream media , is that it went back to zero because obviously the problem was solved, right? The shrewd Federal Reserve intervened with all its tools and more and magically just hid the problem. Yes, so what happened in November was the arbitration opportunity.
So the big question in my mind is, well, what happened between April and November? Did the BTFP go down? No, as you rightly say, it continued to rise directly. Therefore, the recent parabolic movement of the BTFP cannot be explained solely through arbitrage, as it rose between April and November when there was no arbitrage opportunity.
In other words, some additional residual stress is probably occurring or starting to occur , where banks that were not part of the program, which honestly probably looks a bit like a stain. Like you're a bank and you show up at the BTFP window or whatever. It's like the discount window. Yes, it's kind of embarrassing.
Yes, that's correct. Yes. It has a stigma. Yes. And that stigma isn't good in the future when you need to do business with all these other banks and your liquidity needs will be met by them. Obviously, when you look at the risk-benefit ratio, it's not just about arbitrage. Yes, don't even mention it.
So, that's very interesting. So, um, that's fine. Well, in that case, there are already estimates that forget, you know, to expect rate cuts, you know, we're going to start getting them in March and who says they have to be 25 basis points? There could be three rate cuts, but they could be 50 each. What is your opinion on the view that we are actually going to get bigger and faster cuts quickly, and that would obviously suggest more problems?
Yes. Yes, because what people don't understand is that, very often, lower interest rates mean tighter money. Yes. No easy money. Well, of course, because the banks stop lending. That's how it is. Well, everyone thinks, "Oh, I'm going to get rich again when the recession hits." In fact, it's like they have this TikTok mentality where everyone is begging for depression, which, I don't know.
I want your opinion on this, but I think it's crazy because, you know, if we look at the last depressions, they were in the early and late twenties. Horrible economic times. Sure, we had the social awakening of the Roaring Twenties in between, but depressions are horrible for people, even if prices go down.
And I think that's what people are focusing on now. It's like, "Oh, we want prices to go down again." Yes, you have to be careful what you wish for. Yes. Exactly. Because we had a drop in interest rates during the financial crisis and that didn't exactly stimulate demand. That's right, because you didn't have a job.
And, by the way, it wasn't like credit was flowing freely. I'll give you an example . I started investing in real estate in 2012. And I retired, and I just wanted to manage my own money. So I thought, "Okay, what's cheap now?" You know, my favorite investor is Jim Rogers, and he still is. So one of Jim Rogers' rules is to buy low and sell high.
Which sounds easy, but it 's actually quite difficult... It's extremely difficult. Yes, yes, yes, yes, yes. Then I looked around. I thought real estate was cheap. So what I did was basically take my life savings and start buying all these rental properties in the Midwest. Oh. And I was literally buying these things for about $50,000.
And my role model was...and this was in good neighborhoods. In which states? Hey, Kansas City. Okay. Okay. Yes, on the Missouri side of Kansas City. Lee's Summit and Blue Springs and things like that. Do you still shop there today? No, because I've been selling since 2018. Because that follows my rule that I never try to figure out the direction of prices.
Okay. Okay. Never, ever, ever. Okay. I just start by asking myself: is it cheap or is it expensive? If it's cheap, I'll buy it. If it's expensive, I'll sell it. Even if I believe prices will continue to rise, it doesn't matter. So I'm not trying to guess the background. I'm not trying to guess the ceiling.
And we can talk about what I bought in March 2020. It's exactly the same concept. I bought oil. But I thought, and this was maybe at 20. I thought it would go down much further. I thought I would reach 10, maybe five. But I started buying about 20 because the rule is to buy when it's cheap. It went into negative territory for a while.
Yes, that's -38. That's how it is. And well, I started selling around 80, 85. Although I thought the prices would continue to rise. At that point, you know, adjusted for inflation historically, it reached a level where it was expensive. But my point there is that I bought all these properties, Kevin, with cash.
Cash, cash, cash. I had this portfolio of, let's say, 15 rental properties with tenants. You know, I invested maybe 75,000 in each one. I receive $1,100 a month in rent. I have no debts. Yes. None. Everything is good, except for the expenses. Property taxes and all that. Yes, but that's 30% or whatever.
Cash flow. TRUE? So, let's say it's mid-2013 or something like that. I am the perfect borrower. The perfect borrower. Oh, of course. TRUE? I have a credit score of 780, you know, whatever . So I go to the banks. I tell them, "Look, I have all this capital." "Can I at least get a line of credit?" "I don't even know if I'll use it ." No.
No. Rejected, rejected, rejected, rejected, rejected. I tell them, "How about a loan for 40% of the property's value?" Yes. Yes, no. Rejected, rejected, rejected. This is with 0% interest rates. It is an example of how rates can be very low, money can be cheap, but also extremely restricted. Of course.
And if money is restricted, it is very difficult to have an expansion or a significant expansion in the overall economy. And that's why people need to be careful about what they wish for. If interest rates return to zero, people believe there will be a boom, but they forget to ask why they are at zero.
Interesting. Well, because inflation will disappear and we will fight against deflation. That's right, but my argument would be , do you believe it? Well, this is my argument on the matter . Well, people assume that 0% interest rates are normal. Well. And they also assume that, let's say, the federal funds rate is 5.25% right now .
They also assume that those are high interest rates. TRUE. TRUE. No, no, no. Based solely on recent memory, of course. No, what are you talking about? No, this is normal. This is normal. So, if inflation falls back to 2%, and the economy is doing well, why would the Fed lower rates? Hmm. There has to be a problem.
Why would they lower them? They wouldn't lower them. They would keep the rates right where they are because, historically, this is more or less the average. So, if you have a good, structurally sound economy that was growing at a good pace, if you have unemployment at, say, 3.5%, if you have all these factors driving the economy, and it's very, very healthy, running at full speed, exactly.
You would expect the federal funds rate to be close to 5% or 5.25% . So what happens if they see a 2% deflation? And that's why they're cutting back. Okay, so you have to ask yourself if we have 2%...not disinflation, but deflation. What does that mean for asset prices and what does it mean for the economy?
Keep in mind that we haven't seen 2% deflation since the Great Depression. TRUE. It's true. TRUE. Actually, I take it back. We saw it in 1949. Because in the 1940s, before the Korean War? It was just before that. What happened is that we came out of the war and we had price controls. And when they lifted the controls in '47, the CPI rose to 19%.
And then it went parabolic, straight to 19%, and two years later it was really negative. Yes, but only if you go up 20% and down 2%. Who cares? Prices are still much higher in the aggregate total, but we had a period not only of disinflation, which would imply increasingly lower inflation rates, but we actually saw prices fall and it was around 3%.
But if we go back to 2009, right? People forget that we had one quarter of real deflation in 2009, but it was very, very brief. So I don't expect 2024 in general, even if we have a hard landing, to result in massive deflation, because I think central planners will step in and do more than they did in, yes, 2020 or something like that, which leads to the next wave of consumer price inflation.
And that's why my good friend and business partner Lynn Alden has been talking about this for a couple of years now—her base scenario is that the 2020s aren't necessarily like the 1970s, but are much more like the 1940s. Oh, interesting. Where inflation is just this big roller coaster depending on how you look at fiscal policy.
Oh well, they're so good at balancing the budget right now, we should be...oh, wait. Yes. No, I mean, I think we went from stimulus checks in 2020, or sorry, in 2020 and 2021, to basically corporate stimulus checks now. It's all, you know, the Inflation Reduction Act, the CHIPS Act, here we'll subsidize the factories, and what do you think about that?
Yes, I'm referring to the BTFP. Yes, exactly. It's basically a stimulus check for the banks. Yes, Gavin Newsom's bank . Yes, but I think people will probably see stimulus checks again. Oh, really? Do you think they'll go back to that? Yes. Yes. Like a UBI or just direct? OK. No, I think where this is headed now, whether it's 2024 or the next 5 years, I have no idea.
But my base scenario, again just talking about probabilities, is that we will end up in UBI territory. We will end price controls. Oh, wow. And we'll end up with a CBDC, because I think that's how they issue UBI, since the Fed's balance sheet is infinite, and I think they're going to try to control inflation by extending credit, because if you do PPPs and stimulus checks, let's say.
You know, that's going to create inflation if you don't offset it with a decrease in bank loans. Okay, another way to look at it. Yes of course. That's interesting. We're only seeing it through the M2 lens. So, if M2 is rising as a result of the Fed—let's just call it, you know, I don't like the term, but printing money, you know, because they're giving out stimulus checks and it's basically on the Fed's balance sheet, the Fed's liability—then you see M2, more monetary units chasing goods and services, and this is inflationary.
The way to combat that is to say: "Very well, banks, you are going to start lending less." Clear. TRUE? So, basically , you restrict the speed. Yes, well, velocity would probably increase, but you'd make the M2 money supply go up, because what you do with stimulus checks is increase velocity by putting a lot more M2 money supply into checking accounts, which are much more likely to be used by people to spend, right?
Investments. Investments have a speed of two, while the money in your savings is four or five. Yes, I know this gets a little complex for the viewer, but the easiest way to look at it is to say that the Treasury spends by deficit, not by using the Fed's balance sheet, but by printing money. But let's say they do it by borrowing money.
Clear. Okay, you're an investor, you want to buy a 10-year Treasury bond or something like that. So you have an excess of your productivity. You have savings, right? Well, you don't use those savings to buy hamburgers or diapers for your children or anything like that, do you? That's right, those are your savings.
So , by definition, they have a very low speed. Then you say, " Look, I'm getting 2% on my savings." "Why wouldn't I want to get 5.5% on a 3-month Treasury bond and simply roll it over?" Of course. So I'm going to take this money from my savings and lend it to Janet Yellen. TRUE? I'm going to lend it to him.
That's buying a Treasury bond. Exactly. Good. Then Janet Yellen takes that money and says, "Okay, what we're going to do is spend it on stimulus checks." Mhm. So what has happened is that, let's say, $1,000 has gone from your zero-velocity savings account to someone's very high-velocity checking account.
This is how you can get an increase in consumer price inflation even if you're not, you know, even if you're not "printing money". Yes, that's fair. I suppose if you restrict lending, there will be a limit to how often that same dollar can rotate because, supposedly, you can't leverage it. But I see what you mean.
It should , it should go up. So the question is, is this it? It all really starts with a two-year bond. The two- year bond is plummeting, and I really see two options. One is that something is very wrong, which probably means that things have started to change. I agree with that. The second is a combination where things have started to change and perhaps, from the Fed's perspective, they see that inflation is resolved.
Is that a possibility in your opinion? It's definitely a possibility. But, again, we see it through the perspective of Arthur Burns and Paul Volcker. Uh-huh . So even if the Fed thinks inflation is under control, why would they lower rates? Interesting. If the economy were healthy, and they, from their perspective, looked ahead and said, "Well, this is fantastic.
Look at this trend. We've gone from a CPI of 9% to 3 %, and, you know, today's PPI came in a little low. So we can assume it will continue to fall to 2%. But the economy is running at full steam. In that environment, there's no need to lower rates." Interesting. Why would you lower rates? The only reason to lower rates is because the economy isn't healthy.
Yes. Now, if interest rates were 15%, then I think you'd have a strong argument. Because interest rates are high. But 5.25%, those aren't high rates. Those are normal interest rates. Do you think a stronger economy will definitely cause inflation when they cut rates again? Let's hypothetically assume they cut rates and we have a strong economy.
Yes. Why? Why would it produce inflation in consumer prices ? Well, the main reason why It would produce inflation in consumer prices, or at least inflation would accelerate again. Right? It's because what's happening there is that the banks are now saying, "This is fantastic." Okay, we were worried about all this disinflation.
We were worried about the recession. Now we have this bailout. This is excellent news. So we're going to start lending again. And we're going to start injecting loans into the economy. We're going to start injecting loans into the financial economy. And then, what you would expect is something like in the 1970s, where the M2 money supply goes up and up and up, because expectations for future growth and inflation also go up and up.
Now, if that were the case, the yield on the 10-year Treasury note would be anticipating that. It should be reflecting that already. It should be showing that now. Right. That 's absolutely correct. So I think again that's a possibility. Yes, yes, yes. Right? That somehow we have this magical, Cinderella-like story Where growth— yes, where growth just starts to shoot up and then inflation simultaneously comes down.
Let's just say that was all on the supply side. But again, the Fed wouldn't lower rates in that environment because it risks an Arthur Burns scenario and a reacceleration of inflation. It's a risk. It doesn't mean it would happen or that it would play out that way, but you run that risk. So, is there this strange possibility—and I try to look for it, I always try to think about the business and the individual participants in the economy—there are a lot of companies that were really frustrated during COVID because they had all this demand that they couldn't meet.
Yes. Because the supply chains were too tight. But they were set up for a normal economy, you know, from 2018, not 2021. So, during the 2022-2023-2024 period, we see this massive expansion of essentially manufacturing capacity with substantially lower demand. Doesn't that mean we have this almost empty ballast where you could substantially increase demand for supply chains that are now substantially stronger and more stable?
Hopefully, potentially? So you can actually have real GDP growth without inflation. Well, first of all, I think if they solved the supply-side problem , the CPI wouldn't be at 3%. I see. I think it would already be quite a bit lower . So you think it would fall much faster? Yes, because we have more goods and services.
Okay . Right. And let's remember that deflation can be a bad thing, but it can also be a great thing. Well, sure. And in a free market, well, everything should deflate. That's right. Yes. Yes. Yes. True. But, I don't think they want that because it makes their debt more expensive to pay. Yes, it makes their debt more expensive.
I do n't know. That's a separate issue. I don't know if we're at a point right now, even though the debt is 34 trillion . No, believe it or not, I don't know if the debt itself is a problem for the government right now. Why? Because there's a lot of demand for Treasury bonds. If there wasn't a lot of demand for bonds From the Treasury, the 10-year bond wouldn't be at 3.9%.
Correct. Yes. The 2-year bond wouldn't be plummeting in yield, i.e. , skyrocketing in price. Yes. That's a good one. So, obviously, there's a lot of demand. And it's not like the bond market doesn't know we're having these wartime deficits. It 's not like the bond market doesn't know about all the off-balance-sheet obligations.
You say it's not a meme stock. No. No. Paul Tudor Jones, George Soros, they understand it. Yes. Yes. Exactly. The financial experts, they understand it. And they're still buying the long end of the curve, saying they're not worried about the debt. So, we don't have to worry about this impending debt meltdown.
It's bad, but we don't have to worry about it today. Yes. So, what people need to realize is that the bad thing about debt is n't necessarily the debt itself. It's government spending. Look, the way I always use the example is like a heroin addict. Okay. Understood? So, a heroin addict can have a credit card and rack up a $ 100,000 balance buying heroin, which destroys their body, mind, and soul.
Right? So, we could approach that heroin addict and say, "Guess what?" "We're going to take your balance to zero, so you won't have any debt anymore." He'll just spend it again. So, is that a problem solved, or is it an even bigger problem because now he'll go and do more of the same thing that ruined him in the first place?
You see, that's exactly the same as government spending. It's not necessarily the debt that's bad; it's government spending, which distorts the overall economy. Let me give you another statistic here that I think you'll find interesting. In the late 1880s, we were on the gold standard. Got it? So, let's take a 15-year timeframe, from 1880 to 1895.
Okay. We had close to 30, or I think we had 30 to 40 percent deflation. Deflation. Think about the benefit the poor and middle class get if prices were to fall by 40 percent over a period of 10 or 15 years. Even if their incomes don't increase, their purchasing power increases massively. And by the way, during that Over time, nominal wages went up , sure, they didn't go down.
Well, at the lowest level, yes. So, if nominal wages go up and prices go down, it's the best possible scenario. Their purchasing power for the poor and middle class just skyrockets. Yes, I agree with you. Right ? So, this is from 1880 to 1895. Now, let's fast-forward to the gold standard. Let's fast-forward to when the fiat system went crazy.
Right? The peak of fiat madness from 2008 to 2020: endless QE, QT, QE, blah, blah. The QE, yes. The Fed balance sheet at $8.9 trillion, you know, the M2 money supply went up 25% in 2020. You had stimulus, you had ... well, no, we did have inflation. Money supply expansion, inflation, but not inflation in consumer prices.
If you look at the Inflation. If you look at compound inflation, the CPI from 2008 to 2023 went up by about, let's say, 30 or 40%. All in all, all in all, all in all, yes, yes, yes, right. So, on an annual basis, it was like 1.8% or something? Let's say 2 or 3% compounded, you'll get 30 or 40% after 15 years, right?
Whatever the calculation is. But let's go back to the end of the 19th century, where you saw roughly the same amount of deflation. Let's say 30%, 30%. Now, the fascinating thing is that the M2 money supply, the amount of currency units chasing goods and services, went up in the 19th century, in that 15-year period, by 150%.
Wow. Okay? But what will really impress people is that from 2008 to 2023, with this runaway fiat standard , it went up by 150%. Exactly the same. That's very interesting. The same. So, what you have to ask yourself is, what was the catalyst? Why did one 15- year period have deflation and the other inflation?
Or to put it another way, why did one period benefit the poor and middle class and the other hurt them? Yes, I agree. I've done a lot of research on this. And the only major variable I can find—fiduciary? No, it's government spending as a percentage of GDP. Oh, interesting. If we look at the 19th century, federal government spending was about 5% of GDP.
To put it another way, the total output of the entire society came from the private sector; 95% came from the private sector. Right? Whereas now it's 50/50. So, who spends money more efficiently? Oh. The government or the private sector? Always the private sector. Always the private sector. So, is it any wonder that if the private sector accounts for 95% of the economy, We have more goods and services being created to the point where prices fall, even as the money supply increases at exactly the same rate?
Look, that's very interesting. You see? So, the main takeaway here is that if we want to create a society that is more, say, friendly to the poor and the middle class, it's not achieved with more government. No. It's achieved with less government, because that 50% of government spending relative to GDP, for the most part, is just distorting the economy.
It's distorting the ability to create more goods and services, which will reduce prices, and that benefit falls disproportionately on the poor and the middle class. That's right. That's why debt itself isn't really the big problem. It's government spending. Okay, so is this a perhaps depressing, but potentially real, scenario to consider?
Government won't solve its spending problem. Debt won't bring our economy to a standstill anytime soon. So, instead, the money printing keeps going. Yes. We see the wealth gap widening substantially, and if You have no assets, you're falling behind. Yes. Yes. Yes. That's depressing. I think we need to look at Japan.
Japan is kind of an instruction manual. You know, the really interesting thing here is that you say, " Okay, George, I get the reference to Japan." What, does Japan have a debt-to-GDP ratio of 230%? Right now, the United States is at 110 or 120. And I understand that 34 trillion in debt is enormous, but could we be the next Japan?
Or, as many people would argue, is the dollar going to become worthless and we're going to follow in Argentina's footsteps? Yes. I think it's a fascinating juxtaposition. Because if you look at the two central banks and the two policies, not now, but when hyperinflation in Argentina was just beginning, they had very similar policies.
Oh, wow. So how is it that one economy produces deflation and the other produces hyperinflation? Clear. Is it a loss of... And how do you know if the US is heading towards Argentina or Japan? I know it's strange to think about trust in fiat money, but it's relative, everything is relative. Is this due to a loss of confidence in Argentine institutions compared to, perhaps, those of the Bank of Japan?
I think that has a lot to do with it. I understand. And then one has to ask, why does that happen? Well, corruption or spending. Yes, and I think that's another thing I've been analyzing quite a bit and haven't reached a definitive conclusion about. But I think a big part of it could be the way the currency was created from the beginning.
Uh-huh . So, listen carefully to me on this. Your viewers might find this thought experiment interesting. Let's say I lend you a dollar and I do it simply by taking a bill out of my pocket and giving it to you. And then, the next day, you say, "You know what, George? I don't need this dollar. I'm going to give it back." Yes.
So, you give me that dollar and we still have one dollar. We still have one dollar. So, when I gave you that money or lent it to you, the M2 money supply did not change. And? And when you returned it, it hadn't changed either . It's still one. Now, let's think about this another way. Let's say I'm your bank.
Oh, no. OK? Fractional reserve banking. And you say, "Okay, George, I want to borrow a dollar." Yes. And I say, "Okay, Kevin, I lent you that dollar." How did I do it? I didn't give you a piece of green paper. I simply added one digit to your checking account. Correct. Zero. So now, instead of having zero in your account, you have one dollar.
Exactly, exactly, exactly. What have we just done with the M2 money supply? Well, I mean, you just duplicated it. Increase. Yes, well, in one dollar. And that's probably like 10 times. So, what happens the next day, following this same example , is you say: "You know what? I don't want the dollar anymore.
I'm going to give it back to you." So , when you give me my money back, you don't give me a piece of green paper. I simply change your bank account balance from one dollar back to zero, where it started. So you see that what happened is that in those two scenarios, I lent you a dollar. One scenario did nothing to the M2 money supply.
The other scenario increased M2 and then decreased M2. So, money was created and money was destroyed. Yes. Only through the process of lending and repaying. So, let's think of this as a pie chart. Let's say this pie chart represents 100% of the currency. That is, 100% of the existing yen or 100% of the existing Argentine pesos.
Let's take this to the extreme for this thought experiment and assume that 100% of the yen that exist were created through loans. Now, let's assume that 100% of the existing Argentine pesos were printed. Uh-huh . And literally printed until they exist. Correct. So, if the demand for those Argentine pesos decreases, the same amount of pesos still exists.
Yes. You only have the same amount of supply , demand goes down, so theoretically the value will most likely go down as well. But with the Japanese yen , if the demand for yen falls, what happens? The debt is paid, therefore, supply decreases along with demand. Interesting. So, as demand falls, supply also falls because you assume that if there was less demand for yen, people still have yen debt and will proceed to pay that debt, which reduces the amount of monetary units.
So you see how there is a huge difference based on the pie chart and how much of the total currency was created through borrowing compared to how much was printed. If you look at Argentina, most of it, especially lately, was literally printed, like pieces of paper to hand out, whereas with Japan I would say most of it was created by loans from the banking system itself.
It's not conclusive yet. It's just something I've been thinking about. I've started investigating it and it seems I might have discovered something, but that could explain the difference between Japan and Argentina. And if so, then you should look at the pie chart of the United States and the dollar, which would be even more extreme than Japan's.
It would be . It's an argument against stimulus checks and in favor of bank loans. In theory. Well, stimulus checks, you know, where do they come from, right? They could simply come from issuing debt. That's taking savings and turning them into checking accounts. TRUE? If we were giving out stimulus checks like we did in 1862.
Then, I go back to that because it's the beginning of the Civil War with the Legal Tender Act. And that was the last time, as far as I know, that the United States government actually printed pieces of green paper to pay for bombs or bullets or whatever it was they were paying for, right? Now, the process is that the government would simply go ahead and issue the debt , and if there was no one to buy it, then the Federal Reserve would step in as it did during World War II.
Clear. And then they would go ahead and buy that. So, the monetary base would increase, but you're assuming the broad money supply also increases, which may or may not be true depending on who the Fed is buying those Treasury bonds from. It gets a little complex, but the bottom line is that in World War II they weren't literally printing pieces of green paper to buy bombs like in 1862.
It's digital now, on a spreadsheet, and the Fed basically absorbs it all. And that, that can make all the difference in the world. That can make all the difference in the world. That little thing, you think, could be the difference between Japan and Argentina. Ah, that's very interesting. Wow. Uh, that's good.
So, um, brief perspectives. Simply put, what are you doing? What is anyone doing? Listen , listen, who's listening right now? Are you buying real estate, or waiting for the housing market to crash? Do you, you know, buy stocks at all-time highs or wait? What are you doing? Yes, my all-time favorite investor is Jim Rogers.
And one of the reasons he's my favorite is because he has the gift of expressing things in the simplest way possible. Which at first, when you hear it for the first time, sounds overly simplistic. But when you think about it, it's actually very profound. The first interview I heard with Jim Rogers was in, I believe, the original Market Wizards books with Jack Schwager, which I'm sure you've read many, many times.
And he was talking to Jim about his investment philosophy and how he has managed to be so successful. He says, "All I do is sit in my chair and do nothing." And the guy says, "Okay, well, how does that work?" He says, he says, "What the retail investor does is they're always trying to do things. They do n't have enough patience.
So, what I do is just sit in my chair, do nothing, and wait for a big pile of money to appear in the corner. And when I see it, I go and pick it up. And then I go back to my chair, just wait for the next pile of money to appear in the corner, and go and pick that up too. In the meantime, I do nothing.
Okay. And I think that's a great philosophy for people right now. And the good news, Kevin, is that we're at this point where the curve is inverted . So, to gauge the timing and know what to do, it's actually pretty easy. If you believe, if your base case, after listening to me and looking at the yield curve, is that this time is no different, it's probably going to happen like it almost always has since the 1950s.
All you have to do as a retail investor is sit back, wait, and do nothing. Personally, uh, I'm just in gold and Treasury bills. Okay. Oh, wow. A guy of the "Treasury bills and relax." That's a little different from 80/10/10, huh? You have... Yes, so I'm waiting to increase and add to that 80/10/10 by buying things to attack.
So, you're 100% essentially liquid because both gold and Treasury bills are essentially liquid. Yes. To make your investments, to go and collect the stack. Yes, with my cash position. Yes. You have the main positions that you built, but with that cash position, you're accumulating a lot of dry powder.
You're getting paid 5.5 % for that. Yes. And then what happens is, I'm looking at the yield curve, and it's not complex. All your viewers need to do is look at two numbers. Yes. The two-year Treasury yield and the ten-year Treasury yield. And subtract. That's it. That's it. Yes, yes, yes. And all you have to do— how long?—is simply wait for the two-year Treasury yield to drop below the ten-year yield .
Now, Is it all going to explode immediately? No, of course not. There's some time there. But once you see that, it could just go down and then go back up, but once it stays there for, say, a month or two, you know that's the trend. At that point, you have to realize that's when the hard landing usually happens .
That's usually— no, not in a month. It could be three months, six months, something like that. But we're getting very close to the point where the Fed will have to start—and I said will have to start—bringing rates down. I did n't say they'll choose to start bringing them down . That's a big difference.
I think the Fed will have to bring rates down; they won't choose to bring them down. And then, what you do is sit and ask yourself, okay, why is the Fed bringing rates down? Or why are we having this hard landing? Is it because of a war? Is it because unemployment is rising? Is it because of the Middle East?
Is it, you know, why is this happening? Why is this happening? Then you make a decision, you analyze, and you decide what's cheap, and what's expensive, and that's the pile of money that's there in the corner. So, right now, it seems like all this is going on and it's so complex, but in my opinion, this is the easiest time to be an investor.
Because all you have to do is sit back, you know, build your cash position, have dry powder, be liquid, be patient, watch the yield curve, and then evaluate when it's no longer inverted, and then take action. Wow, that's very interesting. Yes, I agree with you. That's very interesting. But you know what's interesting, Kevin?
It's that I spend time... I'm very fortunate to have a lot of good friends who are in a place called St. Barts. Right. And most of these guys were very, very successful hedge fund managers and have literally made billions of dollars for themselves and their clients, and by going there I've gained a great deal of knowledge.
And the last time I was there, I had a conversation with one of my good friends who just He was a sensation in Japan, during the dot-com bubble, and in the global financial crisis. I mean, he's one of the most famous hedge fund managers . I'm not going to say his name, but he's one of the most famous hedge fund managers we've had in the last 40 years, right?
So when he's talking, obviously, I'm listening. And we went over all these trades he's made where he's made all this money, and he said to me, "You know what? Every 10 years or so, you have a generational opportunity. And then every two or maybe three years, you have a really good opportunity. And then in those intervals, you basically do nothing." He says, "But what I've found is that with those generational opportunities I've had, whether it's Japan, dot-com, the global financial crisis, or 2020, those have always been the best investments of my life in terms of performance." But they've always been the hardest to buy.
They've always been the hardest to pull off. And I'll give you an example, and you can relate to this because we were both doing YouTube during the pandemic. And you know, before that, my mantra was this: Buy things when they're cheap, sell them when they're expensive. Buy them when they're cheap, sell them when they're expensive.
Buy them when they're cheap, sell them when they're expensive. And I was out there making YouTube videos about this daily, right? But then, when oil really got cheap, was it easy to decide to buy? Absolutely not, because everyone thought the world was ending. Everyone thought the world was ending. So now you can sit back, you know, with the benefit of hindsight, and say, "Yeah, look at me." I was a genius." Because I actually bought.
But I can tell you, being as honest as I can, I did buy, but it was one of the hardest things I've ever done in my life, Kevin. We can sit here and talk about how easy it is to buy low and sell high. The problem is, when things get cheap, there's usually panic. Yes, panic. And having the mental discipline to pull the trigger is the hardest thing.
Wow, that's very interesting. Wow, yes , I mean, I think the only way—because I agree with what you're saying—I think the only way the Fed can get out of this is with immaculate disinflation and it never going back up. I think that's the only thing that could explain this other than that. And let me remind you, let me remind you, if that happens, this time it 's different.
As we all know, those are the most dangerous words in the English language. Yes, yes, wow. Wow, okay. Well , very good. So, um, how can people find you? Oh, they can just search for George Gammon. I have the whiteboard videos on George Gammon's channel, by the way. People love your whiteboard videos.
Or they can go check out the Rebel Capitalist channel. Sally's there, and that's Moody the Millennial. Oh, Moody the Millennial now. Okay, okay. Moody the Millennial, your friend and relative, Fred. I tried, I tried to make all this esoteric, boring stuff fun. But, yeah, you can Google my name and you'll find my Twitter and everything.
George Gammon, thank you very much. Hey, thanks for having me. , and personalized or securities and services of which I am an affiliation. We could benefit. I also personally trad of the aforementioned securities, the issuers and do not currently act as a market maker.
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