Loading summary
Transcript201 lines
- [00:00]
James Altucher
Foreign.
- [00:02]
Nicole Lapin
I'm Nicole Lapin, the only financial expert. You don't need a dictionary to understand. It's time for some Money rehab.
- [00:16]
James Altucher
Oof. Yesterday the stock market had its worst day since 2020. And so did my portfolio.
- [00:22]
Nicole Lapin
Thank you so much for asking.
- [00:24]
James Altucher
It has been rough. It's in response to Trump's Liberation Day tariffs sweeping international tariffs that I'm going to dig into today. Trump says these tariffs will be good for American workers, that it will bring manufacturing back home, lower the trade deficit and generate revenue. But will it? Because when you start digging into what happens after big tariffs hit, you start seeing phrases like supply chain shock, inflation.
- [00:47]
Nicole Lapin
Spike, and my personal favorite, global trade war.
- [00:51]
James Altucher
Tariffs can be a double edged sword. They're meant to protect domestic industry, but they can also hike prices for consumers.
- [00:58]
Nicole Lapin
They can rattle markets, as we've seen.
- [01:00]
James Altucher
They can strain relationships with global trading partners too. And while it's easy to say buy American, it's a lot harder to do when your grocery bill jumps and that iPhone you were planning to upgrade to suddenly costs 20% more. So today I'm going to ask the big question I think we all are thinking, will these tariffs help the US Economy or hurt the US Economy? And to help me unpack all of this, I'm joined by my friend, investor, author, Money Rehab alum James Altucher. James argues that these tariffs might not be the inflation bomb people are afraid of and that they could in fact create new leverage for the US in future trade deals. I play devil's advocate, of course. And then James and I zoom out and talk about what these tariffs could mean for the stock market, for jobs.
- [01:41]
Nicole Lapin
Inflation, bitcoin, and of course the big one, a recession. James Altucher, welcome back to Money Rehab.
- [01:50]
James Altucher
Nicole, so happy to be here. This reminds me of those 5:00am moments when you were hosting that 5:00am show on CNBC.
- [01:59]
Nicole Lapin
Yeah. And, and you would wake up for it.
- [02:02]
James Altucher
I would wake up. So I'd wake up at like 3:30. I live an hour away. I would get over there and I loved every minute of it. It was always such a pleasure hanging out with you on tv. Who knows if the three people that were listening really paid more than we had. So much fun.
- [02:19]
Nicole Lapin
All of Europe was awake, all of Asia was awake. It was just the US that was like getting up.
- [02:25]
James Altucher
That's true. Yeah. I should realize there's a good, There's a global world out there.
- [02:29]
Nicole Lapin
Big bad world out there. All of your adoring fans all over the world, well, we're talking on Liberation Day.
- [02:36]
James Altucher
Woo.
- [02:37]
Nicole Lapin
How Was your liberation day.
- [02:39]
James Altucher
I, you know, I don't feel like it was any different than yesterday. Like, I don't feel liberated. Do you feel liberated?
- [02:46]
Nicole Lapin
I mean, I feel. I feel scared. I actually, can we look at our portfolios for a second?
- [02:52]
James Altucher
Sure.
- [02:52]
Nicole Lapin
Today? What is your portfolio down today? You know, I tell people, like, don't mourn paper losses, but I do still.
- [03:00]
James Altucher
Well, you know why? It's not necessarily the paper losses. It's the fear. Is this going to continue? Like, are we in trouble? And it's not like, is this stock going to be okay? It's more like, am I going to be okay? Because. Because every stock on the screen is down. Right. The S and p is down 5%. I don't know. Last time it's been down 5%. It feels bad. It feels like March 2020 or December 2008, like one of those periods where you feel like capitalism's going to be dead.
- [03:35]
Nicole Lapin
Yeah, no, I. It feels very deja vu to me. I'm down like 4%, and I've wiped out more than half of my gains the last four years.
- [03:49]
James Altucher
Yeah. So it's very. It's very real and scary to people who are saving and at the same time, their jobs are uncertain because of all the tariff stuff. And I'm saying all this because I think this is what people really care. They don't want to know, oh, what. What AI stock should I buy today? Nobody wants to know that. They just want to know, am I going to be all right? Is my family going to be okay? And the reason I bring this all up is because I definitely think everybody's going to be okay. But it just feels bad right now.
- [04:18]
Nicole Lapin
It does feel bad right now. Not everything is in the red. I think my entire portfolio is basically in the red. But we do have like some Johnson and Johnson, some P and G, some boring consumer staples defensive stocks that are still up. They were kind of dogs over the last few years, but now they're, of course, feeling some love. That's what people do.
- [04:40]
James Altucher
Yeah, it's hard. Your paper net worth. A, it's not your real net worth, and B, it's not your self worth. And it's really important to remember that during the very few periods that are like this. So again, in the past 25 years, there was, you know, nine, 11, there was 2008, there was March 2020, and there's now.
- [05:00]
Nicole Lapin
Yeah, it's hard to not mourn paper losses, and it's hard not to rejoice paper gains. It, you know, the two Most important days that you're invested are the days you buy and the days you sell. And the rest of it is noise because, you know, just like your house, you can watch Zillow porn all day long and look at the value. But is somebody going to pay that? Yes, maybe. No, maybe not.
- [05:26]
James Altucher
Right. And, and to your point, like, I haven't looked at my portfolio at all until you just said, let's look at our portfolio.
- [05:32]
Nicole Lapin
What is it? You didn't answer.
- [05:33]
James Altucher
Well, I don't really, I don't really. I only own stocks that I had invested in privately that are now that then went public. So I'm significantly up on investments like this. But like, like one stock I own is 11% down today, so does, doesn't feel good looking at it. But you know, a weird thing happened to me yesterday, which is I ordered off of Uber Eats and the driver was, was dropping it off and I was outside and she said, she said to me, hey, can you give me advice on my career? Like, what should I do to have success?
- [06:11]
Nicole Lapin
Because you live in a big fancy house. Why did she say that?
- [06:15]
James Altucher
Yeah, it looks nice. Let's just say that. And, and I, I said without thinking about the markets. I said, the thing is, and you know my story, like, I've been broke many times and then.
- [06:27]
Nicole Lapin
How many times?
- [06:29]
James Altucher
At least four. Like dead broke. I've had ups and downs, but like dead broke and then like zero millions, then dead broke again. And, and I said to her, which is the key thing I learned, is that the main skill is how quickly can you bounce back from adversity. Like, you can't look backwards. You have to always be looking for the opportunity, even in bad moments, even in moments like we're experiencing right now, because there's always opportunities. Like, the economy is bigger than ever. There is more money in this economy than ever. And I'm not saying you can just tomorrow turn your financial life around, but you could set yourself on a track. And that alone feels good to make positive progress, to move forward. It took years for me to kind of stop wallowing in the badness and keep. And start moving forward towards, you know, the goodness.
- [07:23]
Nicole Lapin
Yeah, I mean, no, I know you've had some, some bouts of depression during those troughs, and coming back out of it is definitely really hard. I lost my house, as you know, earlier this year, which was a personal trough for myself. But what I realized through that is that the things that I thought were security, like a house, you know, some people think a job, a certain amount in your portfolio all of those things that I assumed would give me safety and security actually didn't know in a second.
- [07:55]
James Altucher
Right. But like, just like a portfolio, even if your portfolio is down, even if the economy's down, even if there's so much uncertainty, there's so much uncertainty right now. But we know that everyone says that every time, oh, the world's over, capitalism said, but it always comes back. We never got closer than 2008. 2008, things were legitimately bad.
- [08:19]
Nicole Lapin
And it's.
- [08:20]
James Altucher
Yes, we still bounce back so strong. I mean, there was like A, an 11 year bull market that lasted until the pandemic. And even that year of the pandemic the market was up. So it lasted until essentially 2022.
- [08:34]
Nicole Lapin
Mm. Yeah. The only certainty is uncertainty. I think the thing people want to know right now, just like, bottom line, are tariffs good or bad?
- [08:43]
James Altucher
Yeah. So let's talk about it. First off, let's set the historical stage. Like what historically has happened and when have tariffs been bad? Because there has been a period when they've been bad. So first off, for the entire first half of the United States, from the founding of the United States until 1913, 97% of the United States revenues came from tariffs. We didn't have any federal taxes, so all the revenues came from tariffs. And during that time, you know, we had the Industrial Revolution, like the US Went from being small country to the basically just about the biggest economy in the world next to the UK and then around World War I, which is right after we surpassed the UK. And I know this is a very different period than now. Nobody has to correct me on that. Obviously it's very different. But historically, tariffs was the main source of revenues, at least for early America. And there was zero inflation then. So tariffs are not really connected to inflation, despite what people are saying. And we can get to why in a second. But then federal income taxes started. It was a constitutional amendment, I think it was the 16th amendment. And Woodrow Wilson was the first president to introduce income taxes. And then slowly the US started shifting their revenues. Now almost all the revenues come from income taxes and very little comes from tariffs. But in 1929, which is a familiar day to people, is the beginning of the Great Depression. There was a tariff act passed, the Smoot Hawley Tariff, which put a huge, like a 60% tariff on everything, like everything imported. So Herbert Hoover, the President, he just did not want any foreign country to interfere with American industry. So he was completely a protectionist and, and isolationist. He didn't want trade, he only wanted US Selling to other countries. He didn't want anybody buying from other countries. So he put this huge tariff on everyone else, on every other country, and then every industry collapsed because there were no buyers. And. And all the other countries put big tariffs on the US and there was a Great Depression.
- [10:49]
Nicole Lapin
Right, but you argue that Trump's tariffs are more strategic in comparison. Right?
- [10:54]
James Altucher
Yeah. So as first off, let's look at 2018. Trump was president before, as we all know, and he put pretty big tariffs on Chinese products in 2018. Mexico, Canada, Europe. He put a bunch of people, remember, he put a lot of tariffs on many, many products, and pretty big tariffs as well, in some cases bigger than the tariffs he's putting on now. And what was the result? Well, inflation was around 1.7%. So it was. Inflation was almost deflation. I talked to a Federal Reserve governor around that time who told me that what worried them at night was not inflation, but deflation, because they were trying really hard to create inflation and there was none. So the tariffs.
- [11:43]
Nicole Lapin
You came on the show, I think around that time, which sounds adorable in hindsight because inflation would later go to 8%.
- [11:49]
James Altucher
Yeah. So what happened was, is that 40% of all the money created since the beginning of the planet was printed by the United States in around early 2021. To do all these bailouts in 2020. Between 2020 and 2021, 40% of all the money created in history was printed by the US this one year. You know, for the pandemic bailouts the year after, like 2022 is 9% inflation. So money printing, just printing free money devalues the money, and that's when there's inflation. So you look at Germany in the 1920s, they had to pay all these war reparations. So they came up with this really brilliant idea. Well, here's one way to make money. Let's just print it and we'll give it, we'll give that to the, those, the Americans in the UK and so on. So they printed all this money. Everyone realized, oh my, my marks don't have any value anymore because there's so much of them. And so then there was hyperinflation. So that's what happens when you print money.
- [12:50]
Totally.
- [12:50]
Nicole Lapin
But they're not like printing money for funsies. Right. So riddle me this. Printing money is a downstream effect of a ton of other macroeconomic factors, whether it's war or layoffs or unemployment. You know, people start borrowing money, interest rates go down, inflation goes up. Isn't that a possibility that it's.
- [13:09]
James Altucher
No, because if there's a fixed supply of money, let's say you're not printing any money. Let's say all you have is a thousand dollars. And let's say you buy food, oil, you know, gas, a place to live, and books to read. I'm just making this up. And let's say, you know, gas. The price of gas goes up. Well, now you're gonna have to make a decision. Maybe you move out of your apartment and get a cheaper apartment because you're gonna need gas to go to work. So you just have a thousand dollars. You have a fixed amount of money. So some prices go up, like gas goes up. Let's say there's a gas shortage for whatever reason. So some things go up, but then you have to take away money from other things so the price of other things go down. That's what happens with tariffs. If there's fixed money, you could borrow money, but there's only so much you could borrow, then you have to pay the money back. But printing money creates new money. And what they did was they printed money and they just gave it to people, Which I'm not saying that was good or bad. Like people were struggling in the pandemic, but they just gave that to people. And some people really needed it. But for some people, it was just extra money. So these people just bought more things. And so then the prices of everything go up. It's just like if suddenly everybody has, like, double the amount of money, then prices will double. So that's exactly what happened. Like suddenly there was just all this extra free money for many people, and. And they started buying more things. They were willing to pay more money for things. People recognize this, so suppliers charged more. That's almost. If you look at almost every time there's like, periods of inflation, not just in the U.S. but in any country, it's when money, just free money, happens to be around.
- [14:44]
Nicole Lapin
Well, I mean, maybe that happens in a vacuum, but the federal government is not just printing money for their health. I mean, in economic times, when people are upset and they're crying recession, like now, maybe they're printing money. It's not just. Yeah, because they can. I mean, listen, if I could print money, I totally would. But I think we should step back because I think we need to really just discuss what Trump actually did this week.
- [15:13]
James Altucher
Hold onto your wallets.
- [15:14]
Nicole Lapin
Money Rehab will be right back, listeners.
- [15:18]
Nerd Wallet
We're always talking about smart ideas here. And using Nerd Wallet to find the best financial products for you, like credit cards, is more than smart. It's genius because the nerds already did all the research, so it's easy to find the right card for you in minutes. I'll prove it. I want to upgrade my card, so let's use NerdWallet's Card Finder tool together. Okay. First question. What's my credit score? I think it's good. I think it's in the seven hundreds. Next question. What kind of rewards do I want? Probably travel. I'd like to travel some more this year. Next question. Am I planning to make a big purchase soon? I sure am. I'm getting married this year and there are a big number of big purchases. So yeah, check that box. Next question. How much money am I spending monthly? I'm just gonna put in a little something something. And here they are, several really great recommendations and some travel. Okay, Honeymoon. Now it's your turn. Get matched with your card today@nerdwallet.com terms and conditions apply. Credit products subject to lender approval. See nerdwallet.com for details.
- [16:25]
Nicole Lapin
So I just went to the grocery.
- [16:26]
James Altucher
Store and I actually flinched at the cost of eggs.
- [16:29]
Nicole Lapin
And I don't even really eat eggs.
- [16:31]
James Altucher
That's how bad it is. Everything feels more expensive. And so I'm hearing from a lot of money rehabbers right now that their.
- [16:36]
Nicole Lapin
Credit cards are getting a lot of exercise right now.
- [16:39]
James Altucher
But the last thing I want for.
- [16:40]
Nicole Lapin
Any of you is to go into credit card debt.
- [16:42]
James Altucher
Enter Chime Credit Builder Card. This is a secured credit card with no annual fees. You can build credit with money you set aside and avoid interest or expensive debt. Plus, you can get access to my pay and get up to $500 of payday with no mandatory fees. Start building credit with your everyday purchases and regular on time payments with no annual fees, interest or credit. Check@chime.com mnn and then when you go to chime.com mnn as in money News Network, you'll start thinking about all the doors that will open once you start building your credit.
- [17:16]
Nicole Lapin
Like lower rates on loans.
- [17:18]
James Altucher
Who doesn't want that? Turn your everyday purchases into steps toward your financial goals with Chime Secure credit Card. Get started today@chime.commnn that's chime.com Chime feels like progress. The Chime Credit Builder Visa credit card is issued by the Bancorp Bank NA or Stride Bank NA Spot Me Eligibility requirements and overdraft limits apply. Out of network ATM withdrawal and OTC advance fees may apply. Late payment may negatively impact your credit score. Results may vary. MyPay eligibility requirements apply. Credit limits range from 200 to $500. Go to Chime.com disclosures for details.
- [17:52]
Nicole Lapin
And now for some more money Rehab Foreign. I think we need to really just discuss what Trump actually did.
- [18:04]
James Altucher
Sure.
- [18:04]
Nicole Lapin
This week, the highlights are. I'll just read these 10% baseline tariffs across most countries, new reciprocal tariffs, notably an additional 34% on Chinese goods, 20% on the EU, 32% on Taiwan. A lot of economists are trying to predict whether these are going to be good or bad or what. It reminds me of my favorite parable that I will get to. So a lot of economists are worried that this is going to undo a lot of progress that has been curbing inflation. You have another take. I know Stanford and Harvard and all the fancy school professors are yelling at you on Twitter. I refuse to say X, by the way, but they're yelling at you because of your take on this.
- [18:41]
James Altucher
Yeah. So that's why I just wanted to take inflation off the table. Because historically, tariffs don't cause inflation. We have the example of 2018, 2019, early 2020. We have the example of the entire 1800s. We have the example of Smoot Hawley where there was deflation instead of inflation. The worst the tariffs are, the more deflation there is because industries go bad. And that's why we're worried about a recession. I don't think anybody really is worried about hyperinflation right now. It's not like we have so much money we got to take a wheelbarrow of dollars to buy a loaf of bread. We're really worried about a recession, which is kind of corresponds with deflation rather than inflation. So inflation is just off the table. Which is why I bring up that, that example. It never occurs because of tariffs. It didn't occur in 2018, didn't occur in 1929, didn't occur in the 1800s. Some prices do go up, but that means other prices go down. So that's that. But the problem is, could industry go bad if prices on steel go up because of 25 steel tariff on China, Will people stop building things because it's too expensive to build things? And will the housing industry collapse and people lose their jobs? And then we have a recession and it's like a death spiral down. So it's not that I'm worried price will go up. The real worry is, will there be a big recession? And even there, the answer is a solid no. Like, everybody's worried, will there be another depression like what happened when the Smoot Hawley Tariff happened in 1929 and the main difference is the Smoot Hawley tariff was a blanket tariff on everything, just like that 10% tariff Trump is doing. Now. That's a blanket tariff, not the reciprocal ones, but the blanket 10% tariff that he announced. But Smoot Hawley was almost a 60% tariff, or let's say 50% tariff on everything that was being imported. So 50%. If you put a 50% tariff, you're basically saying, we don't want to trade with you ever again. If you put a 10% tariff, you're saying, please trade with us as much as possible. So we make that 10%. And you're also saying with these reciprocal tariffs, hey, you tariff us, we tariff you. Let's call the whole thing off. Like, let's just meet at the negotiating table and negotiate. Which is what he's been doing with Canada, with Mexico, with China. Look, Apple today just announced they're going to spend $500 billion in the US to build factories here so they can make products here. So $500 billion is a lot of money. And intel and Taiwan Semiconductor, they just announced they're going to spend $200 billion building tech facilities here to avoid tariffs. So we're already, in one day, we're already seeing the results. Like $700 billion just announced in 24 hours is a huge impact on the.
- [21:33]
Nicole Lapin
Billions of dollars, for sure. I mean, I thought it was a negotiating tactic, too, and I'm still waiting for it to manifest that way for.
- [21:42]
James Altucher
Right.
- [21:42]
Nicole Lapin
But you gotta Trump to say, psych, just kidding. We're good.
- [21:46]
James Altucher
But think about, like, a negotiation. Think about a negotiation with your job. Like, let's say someone's at a job and they tell and they want to negotiate a higher salary. And let's say they're really, truly willing to, to leave. They say to their boss, I'm leaving, see you later. And the boss says, wait, wait, let me make a counteroffer. And the right response is, well, I'm leaving, see you later. And you walk out the door. You got to really show people that you're serious in a negotiation or else they take advantage. And I'm not talking about Trump. I'm just talking about every negotiation in the world. If you show you're scared and you're not afraid to do what you say you're going to do, you're going to lose the negotiation. So this is my theory of what Trump's doing. He said, let's just do this first. And yeah, there's going to be a lot of people afraid, including the leaders of foreign countries and the CEOs of major companies and the stock market, unfortunately. And then I'm just going to be silent for a while and, and see what happens. So we already see like hundreds of billions of dollars worth of announcements. Canada and Mexico clearly are negotiating with us, by the way, in 2018 with Mexico, we put all these tariffs on. Then we. Then by 2019, all the tariffs were dropped. Mexico dropped all their tariffs against us.
- [23:02]
Nicole Lapin
And, but they're like our homies.
- [23:05]
James Altucher
Canada, China, in 2020 agreed to spend $200 billion on purchasing stuff in the U.S. they agreed to start prosecuting theft of intellectual property, which is a big problem between China and the U.S. so with every country we have strategic and financial issues and Trump is just laying it all out and putting it on the negotiating table. And his argument is, oh, I just want fair trade. But he wants other things too. He wants some strategic objectives, by the way, I'm not saying he's going to achieve those. We're just kind of getting into his mind right now and like, rather than, rather than saying, oh, he's trying to destroy the country, this is what he's trying to do. And then we have to decide whether he's going to succeed or not.
- [23:44]
Nicole Lapin
Say what he's trying to do. There are three main things that he's trying to do. Right. To move more manufacturing back to the United States, which benefits the middle class American industry. In theory, to make trade more fair by lowering trade deficits and to create more revenue. If inflation is not going to happen, what do you think is going to happen?
- [24:04]
James Altucher
Then there's a fourth thing which is also to negotiate other strategic initiatives. Like maybe like a bargaining chip. Yeah. So like with China, stop sending fentanyl into the US Then we'll lower tariffs with Canada.
- [24:16]
Nicole Lapin
Isn't Canada the one sending fentanyl?
- [24:18]
James Altucher
Well, China, they're getting it from China and Mexico is getting it from China. And this is from all the law enforcement agencies. Then cartels that operate out of these two places on the border, they're sending it into the U.S. but it's all originating in China. So that's why it's a negotiating stance for Trump.
- [24:36]
Nicole Lapin
Okay, so four of them. So do you think tariffs are going to accomplish any of those?
- [24:41]
James Altucher
Well, I think with the strategic stuff, like, I think it's already happening. Like we've already seen negotiations with Canada, Mexico and even China. And also these companies that are, well, okay, let's talk about moving manufacturing in the US I don't know how it's going to go in general. But we just see evidence that a Apple again the $500 billion investment, then intel and Taiwan Semiconductor and then you look at 2018, roughly there was, they estimate about 30,000 new auto worker jobs were created in the U.S. because of tariffs on cars on China or in Asia in general. And so there's evidence that that does bring. Now do we want manufacturing here? I don't know. But there's evidence that it does bring manufacturing here. And so now does it generate revenues? I actually don't think the tariffs are going to generate much in revenues. I think people will start stop buying products that are too expensive. So then there's no tariffs. There's, if you don't buy the foreign product, there's not going to be a tariff here. So I don't think it's going to generate much in revenues. Maybe the 10% blanket tariff. So let's say we have three and a half trillion dollars worth of foreign imports. So 10% blanket tariff would normally generate $350 billion annually. Maybe it'll because fewer people will be buying foreign goods. Maybe it'll go down to $250 billion in revenues annually, which is not bad, but it's not amazing. I mean personal income taxes generates two and a half trillion dollars in revenues for the US so this blanket tariff will only alleviate 10% of that.
- [26:13]
Nicole Lapin
Yeah, I mean if we're calling off reciprocal tariffs, then it's more of a short term trade war strategy than actually a long term play to move manufacturing to the United States. Because if we did that, there is a lot of other stuff that would need to go right. There would need to be factories that were built, people need to be hired and trained. There will probably need to be some sort of incentive to hire workers instead of investing in tech could replace human labor. Right. So a lot is happening in the economy right now and a lot would need to go right for that goal to be accomplished.
- [26:44]
James Altucher
I agree. So. So other things that happened and again we can look at 2018 other things that happen is manufacturing spread out a little bit more. So instead of it all being in China, we went to Vietnam, we went to India, we went to places where we weren't putting on as high of a tariff and or we worked out deals to make the tariffs and duties lower. The other thing is, by the way, where are the workers? Because in the US we're essentially deporting a lot of the workers. So what's going to happen is robotics companies are really starting to amp up their investment. And you know, you have things like The Optimus robot being built at Tesla, I don't know when that's going to be ready for prime time. Let's say 2026, 2027. But that's going to be the new factory worker. I mean, already Tesla's automating a lot of their, their energy products so they could build an electric grid almost automatically with robots. So we're going to see some transition in technology that's going to replace the workers. Also doesn't mean the workers are going to be out of jobs. They just won't be at those jobs.
- [27:48]
Nicole Lapin
But maybe getting higher minimum wage. I mean, the chatter is that a higher minimum wage might offset some of the economic fallout of the adjustments to higher tariffs.
- [27:58]
James Altucher
I mean, I hate to sound like overly conservative, but let's say you're a manufacturing company and you're like, oh, my gosh, steel prices just went up, so it's going to be, it's going to cost us more to build cars or whatever. Oh, my God, now the minimum wage, now it's going to cost us more to have labor. So they're going to, what's going to happen is they're going to just switch to robots eventually and they'll raise the price on their cars or they'll insource steel as much as they can, because steel does come from the US Also. Those have to, like, make more of it. So, you know, what happens typically is you start looking for alternatives to the things that are going up in cost, which is why overall inflation never occurs when there's tariffs. So take any basket of goods. If some of the goods go up, other goods are going to go down again. Overall inflation only happens when you're printing up just a lot of excess money. To your earlier point, I mean, I.
- [28:47]
Nicole Lapin
Don'T know necessarily care where inflation is coming from. They just care. Like, are they going to pay more for that, you know, proverbial basket that we talk about when we talk about inflation.
- [28:57]
James Altucher
But what people, what a home does is they look for alternatives. So they don't shop at, I don't know, Whole Foods. They shop at Costco or Walmart or whatever. And, you know, I bet you didn't know, like on, on, you could go to any site that sells gift cards on the planet and you could buy infinite amount of Uber gift cards to do Uber rides for 75 cents on the dollar. You get 25%. All your Uber rides just by buying gift cards. Nobody does it, though. But that's an alternative to whatever people are doing now, which is just straight Riding Uber. So when people look, there's always alternatives to find cheaper goods or goods that are trying to be more competitive because they're made domestically. So they're cutting prices to, to compete with when they couldn't compete before with the Chinese products or whatever. So yes, it's true, people don't care where the inflation comes from, but there's not going to be. Individual products might rise in prices, but you can't have overall inflation because where there's no money for that if there's not extra money in the. So there's only.
- [29:55]
Nicole Lapin
What if there is extra money because of it? What if.
- [29:58]
James Altucher
Yeah, so if money is printed, if money is printed, then there will be inflation. But that's not necessarily a bad thing either. We've had 30,000 or whatever percent inflation since 1903. Right. So 3 cents in 1903 could buy what a dollar could buy now, more or less. But our quality of life has gone, gone up. Amazingly, inflation is not necessarily a bad thing. It's what basically fueled all the innovation and discovery in the United States because there was excess money floating around that went into inventing new things for our money hungry consumers to buy.
- [30:33]
Nicole Lapin
I mean, I don't know, James, when you talk about going to buy gift cards to buy food and stuff like that, that screams like recessionary vibes. Are you net net saying that we're past the point of no return for a recession?
- [30:47]
James Altucher
No, I'm not, I'm not saying that. I'm saying even in a right now, for instance, you could buy Amazon gift cards and buy all your groceries through Amazon at $0.80 on the dollar. So this is just what I'm saying is there's an alternate. People will start being creative and think of alternatives to way they're spending now. It doesn't matter if you're rich, not rich, poor, middle class, whatever, you might not buy a car that just went up from 80,000 to 100,000. You might say, look, I'm fine with the car, that's $70,000. And so people will just start looking for alternatives. Particularly if you're not making more money now, if money is printed, which it could be, people will have more money in general and there will be inflation in the economy. And whether that's a good thing or a bad thing will have to be determined in the future. But that is one way to avoid a recession. That's why they printed money in the pandemic, to avoid a depression. So, and it worked. I mean, there was inflation, but we avoided a depression.
- [31:43]
Nicole Lapin
Okay, this Reminds me of my favorite parable. We're going to have story time for a second. You probably know this. Let me know if you do. It's about a Chinese farmer who lived in the mountains and spent all his days with his son and his horse farming his fields to make a living. Okay. Do you know this one?
- [32:00]
James Altucher
Yes.
- [32:00]
Nicole Lapin
Oh, you do?
- [32:01]
James Altucher
Okay.
- [32:01]
Yes. It's a great story.
- [32:03]
Nicole Lapin
Okay. Our producer, Morgan hadn't heard it yet. Maybe some of our listeners haven't either. But it reminded me when you were talking about whether or not this is good or bad. We don't know. Time will tell. In this parable, a farmer's horse ran away and everyone in the town said to him, you must be devastated.
- [32:18]
James Altucher
You lost your horse and now you.
- [32:20]
Nicole Lapin
Cannot plow your fields. The farmer replied very casually, maybe yes, maybe no. The next day, not only did the horse return, he brought two stallions with him.
- [32:30]
James Altucher
The people in the town rushed to.
- [32:32]
Nicole Lapin
The farmer and said, that's great. You must be so happy. You now have three horses and you have just become one of the richest farmers in the land. The farmer replied casually again, maybe yes, maybe no. Soon after, the farmer's son was trained, the stallions and one of the new horses reared up and landed on the boy's leg, breaking it.
- [32:52]
James Altucher
Now the townspeople came to the farmer.
- [32:54]
Nicole Lapin
And said, you must be so devastated. Your boy broke his leg and now he cannot help with the chores. The farmer once again responded, maybe yes, maybe no. It's almost over. Days later, war broke out and the sons of all the farmers were sent to fight. All except the boy who broke his leg. The townspeople said to the farmer, you must be so happy your son does not have to go to war. And the farmer replied, maybe yes, maybe no. And the story continues.
- [33:22]
James Altucher
Time will tell, right?
- [33:23]
Nicole Lapin
Maybe yes, this will be a good thing. Maybe no. We don't have all the information.
- [33:28]
James Altucher
I'll say what is bad though, if. If tariffs are too big, we get into the Smoot Hawley Great Depression era. If money printing is too big, we get into hyperinflation. So mild inflation is good. Tariffs are good. They'll generate revenues for all the reasons you mentioned. They'll generate revenues. They'll generate strategic possibilities for the administration. They'll move some businesses onshore. So there's good. There's some prices of products will raise, but some products of prices will go down. But too much is too. Is too much. Then you have the Great Depression. So people are trying to determine, are these tariffs too much? And my maybe yes, maybe no. Well, I'LL say the one difference is the tariffs that started a Great Depression were 50 to 60%. Here we're talking about a 10% blanket tariff. All the other tariffs are reciprocal tariffs that could be negotiated. So countries will bring their tariffs down and we'll bring our tariffs down as a result, or there'll be some other negotiation or we'll switch to other products or we'll insure or whatever. So. And similarly with avoiding a recession, yes, we'll print money there, that will lead to inflation, but inflation, we've had inflation for the past 100 years and we've flourished. So it's not necessarily a bad thing. It's only bad if it's hyperinflation, if it's too much. So people could get worried about that, but hasn't happened yet in the us so overall everything's going to be fine. It's just we might see a lot of this short term uncertainty because we just don't know were these tariffs too big? I don't think they were. But you know, a lot of people are worried about that. The stock market is clearly worried about it. The stock market goes down too much, there's a recession, but then they'll print money to kind of counterbalance that. That's where you kind of go back and forth like, oh, there's a recession, oh, but then there's going to be money printed and there won't be a recession. But here's another thing to keep track of. AI is a new industry that is a weird kind of new industry. It's an industry that is powering. It's like accelerating every other industry. So it's not an industry by itself. It is sort of the fuel. It's like an, a super energy fuel that powers innovation in every other industry. So forget about the government, forget about the economy, forget about geopolitical stuff. AI by itself is powering enormous possibilities in every other industry you could think of in ways that are unimaginable. It's like the future is coming to our doorstep faster than we thought it would. And that's going to power this economy more than any of this discussion about yesterday's or today's tariffs and, you know, today's regulations and so on.
- [36:18]
Nicole Lapin
I mean, that reminds me of like 20 years ago when I was reporting on the breaking news that Apple launched its first ipod or that Google was announcing Gmail, which I legit have videos of baby Nicole reporting on this, you know, when technology was a new sector or whatever and then every company became a technology company. So that it reminds me of that the way you're talking about AI.
- [36:43]
James Altucher
Yeah, like think of, think of like you're a farmer and you think, well, what does AI have to do with me? Well, John Deere is like full, you know, they make the tractors. John Deere is full force, an AI company. The tractors are going to have, you know, full self driving, for instance. So now the farmer can work on other opportunities rather than riding the tractor around. The tractor is going to have an ability to recognize where the weeds are. So it'll, it'll only spread pesticide there using AI and save across the industry tens of millions of dollars on pesticides. So these are just two things in one industry that I could think of. But every industry is going to leap forward far faster than we thought, by the way, medical being number one among that. Like what, what's happening in medical AI is like unbelievable. But that's more interesting from an economics and stock point of view than these tariffs. Tariffs. In the long run, we're going to see nothing much is going to happen just like in 2018. Inflation. There's going to be a little bit of inflation if they print money, else there's going to be deflation and a recession probably, and inflation is going to be okay. It's not going to be as much as before because we're not going to print up 40% of all the money in history and we'll survive. But then when we look around, well, what stock should I buy? We're going to look at like the stocks using AI to generate enormous profits. And that's going to happen regardless of the economy.
- [38:07]
Nicole Lapin
Well, thank you for another farmer story. You know, I love farmer stories.
- [38:11]
James Altucher
We should wish this should be a podcast about farmers. Two Jews talking about farmers.
- [38:16]
Nicole Lapin
Listen, we're old enough to know, like, we're old enough at this point to have a lot of perspective, you know, 20 years ago or whatever, or 2008, I was freaking out. You were freaking out. We've kind of seen this happen before.
- [38:29]
James Altucher
I was freaking out and I went broke. Like, I've got your back, baby. There's all these times I've gone broke that nobody knew. Like that was important to me to never let anybody know. And. But I was going through it when I was on your show in 2000 or whatever it was in 2008 or 2007.
- [38:46]
Nicole Lapin
It was hard, but so was everyone, to be fair. Yeah, at that point, everybody was, was feeling it. So we did story time, we did tariff time. Let's do a little game time. This is A variety show. You want to play bullish or bearish?
- [39:02]
James Altucher
Yeah, let's do it. You know, I have to tell you, one time I go on CNBC and it was in 2008 or 2009, and I was optimistic and bullish because, like, Warren Buffett just bought $5 billion worth of Goldman Sachs that day. And, you know, it was clear the US government was going to bail out all the banks, which you could argue whether that was good or not. But why wouldn't I be bullish then if all the banks were going to survive and Warren Buffett was investing? So I'm being driven home, like in a cab, and my mom calls me and she says, maybe when it's so bad out there, you shouldn't be smiling all the time on tv. And I said, but mom, this is the exact time that one should be smiling is that this is where opportunities are created.
- [39:51]
Nicole Lapin
That's such an important point. It is where opportunities can be created if you go after them. And some of the greatest fortunes have been made when there was a recession or depression. And we've never not recovered from a single one in US History. I know people are like, but. But this one is going to be the one. But it's not.
- [40:12]
James Altucher
2008 was so bad. And look, 911 was so bad. That was scary.
- [40:18]
Yes, of course.
- [40:19]
Nicole Lapin
And it was, you know, there are black swan events like that. We just don't know endemic.
- [40:24]
James Altucher
Who thought they shut down the global economy for like six months? How did the world survive? How did the world economy survive?
- [40:33]
Nicole Lapin
I don't know. We're in a.
- [40:34]
James Altucher
Convinced they wouldn't.
- [40:36]
Nicole Lapin
We don't know. You're procrastinating from our game. Hold on to your wallets. Money rehab will be right back. And now for some more money rehab. Okay, bullish or bearish? S and P500 bullish Tesla. By the way, I'm very sorry that someone keyed your wife's cyber truck.
- [41:04]
James Altucher
That sucks. Yes, yes. We were surprised. We didn't. This wasn't like a thing at that moment. It was like a month or so ago.
- [41:10]
Nicole Lapin
My husband also drives a Tesla and my, my car burned in the fire, but we were driving in his Tesla and like some motorcycle guy, I remember a few weeks ago came up beside us and just kind of like slowed down, yelled at us, licked us off. And I was like, baby, did you do anything? Like, did you. Were you defensive driving? What's. What was going on? And he was on like the auto driving mode. And then we, we just thought, yeah, that's because you're driving a Tesla. There's no other reason that guy did that.
- [41:38]
James Altucher
You were, you were driving an environmentally friendly car in California.
- [41:44]
Nicole Lapin
Here we are. But no, there's so many bumper stickers, right? People saying, you know, I got this before Elon went cuckoo bananas. But Tesla, are you bullish or bearish? If, if, if we're, you know, doubling down on AI and robots and all that stuff, you know, the Tesla robots are just starting.
- [42:02]
James Altucher
I had been bearish for a long time because I felt like, okay, the cars are good, but it's one car, car company among many. But you know, the more I look into it, and particularly now I'm, I'm bullish because within two years it's not going to be a car company. It's, it's really an AI energy products company. They're going to build electric grids, they're going to power entire societies. They're going to, they're going to have the ro, the Optimus robots, you know, automatic, you know, there's 67 million blue collar workers in the utility and electric and energy space and these Optimus robots could end up being a big chunk of that workforce. And meanwhile the car sales are going down, but every other part of Tesla, like these energy products are like doubling every year. So I think within two years the car revenues are not going to be as much as other revenues at Tesla. So I'm very bullish.
- [42:52]
Nicole Lapin
That's what I think too. We're talking to someone who's, I know, your favorite technical analyst who, you know, showing all these charts of, of Tesla and where the, the peak and the troughs and the moving averages and all that stuff are, and they're like get the fuck out of Tesla. But I feel bullish on it too.
- [43:09]
James Altucher
That chartist might be looking at just like today or tomorrow, I don't know. But long term, is Tesla really not going to hit all time highs again when it's selling millions of robots a year?
- [43:20]
Nicole Lapin
Right, Bitcoin.
- [43:22]
James Altucher
I'm very bullish.
- [43:24]
Nicole Lapin
How much bitcoin do you have?
- [43:26]
James Altucher
It's more like I'm invested in a lot of bitcoin companies, so crypto companies. And I'm, I'm actually more bullish on things like Ethereum, Solana and other cryptos. So let's just say the crypto sector I'm very bullish on, but that means I'm bullish on bitcoin.
- [43:40]
Nicole Lapin
Okay. The dollar. Bullish or bearish?
- [43:43]
James Altucher
Maybe bearish because we are going to print money and prices. Value is a function of supply and demand. So if the supply of dollars goes up, the value goes down, Particularly relative to something where the supply doesn't change. Like bitcoin.
- [43:58]
Nicole Lapin
How about gold?
- [43:59]
James Altucher
I am always bearish on gold. I hate gold.
- [44:02]
Nicole Lapin
What?
- [44:03]
James Altucher
Gold is like a rock. Like, okay, yes, but it's a yellow rock. Like, it has no actual value.
- [44:11]
Nicole Lapin
Totally. But bitcoin is not even a rock.
- [44:14]
James Altucher
No, no. Bitcoin has a million man hours of code in it. Like, bitcoin has a lot of functionality. There is functionality to gold, but it's the same as silver. So silver is an antibacterial metal, which is why we have silverware and why our fillings are. Our cavities are filled with silver.
- [44:31]
Nicole Lapin
I hope that you got rid of those. But you also have, like, collodial silver where you spritz in your mouth and if you're sick and it helps, allegedly.
- [44:38]
James Altucher
You could do the same with gold, by the way, but gold's 60 times more expensive. So gold is just useless. And let's say. Let's say you have all your wealth.
- [44:47]
Nicole Lapin
And value that somebody attributes to it. It's the value that somebody attributes to it. It's not actual rock itself.
- [44:53]
James Altucher
Right? So it's like a story we tell ourselves that gold is a precious metal and it has value and it's a limit and a limited resource, which we don't really know. We don't know how much gold is in the earth. It's not a limited resources. Could be unlimited or mostly unlimited. And if you really. Let's say your wealth is stored in gold, what are you going to do? Like, if there's riots and your city is invaded, Are you going to just put all your gold, like, in a truck and.
- [45:16]
Nicole Lapin
No, no, like gld, like an etf, Right, but then you need collecting, you know, but then you need, like, roaches from your grandma.
- [45:25]
James Altucher
Right, but then you need, like, dollars. Like, gold can't buy gld. You have to abuse dollars to buy gld. Gold can't be used to buy anything. Actually. There is no world in which gold can buy something. No country allows you to buy something with gold.
- [45:39]
Nicole Lapin
Right, but it can hold your value while other stuff is going in the pooper.
- [45:44]
James Altucher
Right, but that's just a story. People could.
- [45:47]
Nicole Lapin
We love stories, though.
- [45:48]
James Altucher
The whole.
- [45:48]
Nicole Lapin
This whole spiel is about a story. All of this stuff is stories we tell ourselves.
- [45:52]
James Altucher
Well, no, because with the dollar, it has value because you actually need dollars to pay taxes. So you need to amass dollars to pay taxes. And with gold, though, you don't really need for anything and crypto you there. Every possible crypto token has a functional use. So if you're truly rebuilding, let's say the banking system or other projects that crypto is involved in, you need crypto for it. But what do you really need gold for other than like you say, as a store of value, but that could change.
- [46:21]
Nicole Lapin
Okay, how about banks? Banks are getting a beating right now. J.P. morgan, Goldman Sachs.
- [46:26]
James Altucher
I'm kind of bearish on banks.
- [46:28]
Nicole Lapin
Bank of America, I think.
- [46:30]
James Altucher
I think banks are. Are basically kind of scams. So. And I think this is where crypto sort of solves the bank issue. But I do have to say that the banking system's probably here to stay.
- [46:44]
Nicole Lapin
Yeah. James, you can't say it's a scam.
- [46:46]
James Altucher
Yeah, well, I mean, banks are constantly getting fined for illegal activities, but banks are here to stay. You have the whole cabinet is like ProBank. And that's why the US government's been traditionally anti cryptos because they didn't want to offend the banks. Because crypto and banks are sort of opposite each other. But I think they'll be just like the phone company and the Internet where they were opposite each other in the 90s, but then they sort of merged intentions. And I think that's what will happen with the banking system.
- [47:11]
Nicole Lapin
Yeah, I feel like there is an access like, or an invisible string between Goldman and the Treasury Department.
- [47:17]
James Altucher
I think that's true. Look how many treasury secretaries were worked at Goldman like Hank Paulson. I don't know. There's a whole bunch.
- [47:24]
Nicole Lapin
Geithner, right?
- [47:26]
James Altucher
Yeah, Geithner. Yeah.
- [47:27]
Nicole Lapin
Okay. Walmart.
- [47:30]
James Altucher
Bullish. Yeah, definitely bullish.
- [47:31]
Nicole Lapin
Even with all the.
- [47:33]
James Altucher
Oh, particularly with tariffs. Because one, one skill. Why did Walmart succeed when almost every mega grocery store failed? Is Walmart was particularly good at switching its supply chain very fast on the hundreds of thousands of products it sells. So what happens with high big tariffs? You need to immediately switch your supply chains so you're getting products from places with lower tariffs. So Walmart is particularly good at this. So the tariffs actually make me super bullish on Walmart.
- [48:02]
Nicole Lapin
What about Costco? They have less SKUs and aren't great at that type of pivot.
- [48:08]
James Altucher
Yeah, but Costco's got the membership aspect, so it's got a big moat, which is why Charlie Munger, you know, Warren Buffett's former number two guy, he's passed away. But Costco also, I'm bullish on this very smart company. By the way, you could buy gold bars at Costco, sometimes at a discount to the regular gold price.
- [48:25]
Nicole Lapin
That's the only time I can get glasses there. In your old age, like you could get so many things at Costco. I do own some Costco. Okay, how about Nvidia?
- [48:35]
James Altucher
Nvidia? I'm mostly bullish, but here's the thing. Eventually you're not going to need 100,000 Nvidia chips to make the best AI, just like you don't need any more to upgrade your phone every year. We used to upgrade our phones every year. Now we don't really have to. I mean, I just bought an iPhone 16, but my last iPhone was the iPhone 12 because it was good enough. And eventually Nvidia chips will be just good enough. But it's growing so fast now. I would. I'm still bullish on Nvidia, but not for the super long run, but for.
- [49:07]
Nicole Lapin
All the AI that you're talking about, you're going to need compute.
- [49:10]
James Altucher
Yeah, but there's a. There's going to be lots of chips that are going to be just. That are going to be good enough. Just like the phone is good enough for me to talk on now and use apps and watch videos and so on. There's going to be other chips out there and companies won't need a million Nvidia chips to make the best AI. Maybe they'll need a thousand chips and eventually just one chip. So I know chip companies eventually fall prey to. There won't be an upgrade cycle.
- [49:40]
Nicole Lapin
Yeah, but you're going to need energy. So what about nuclear?
- [49:43]
James Altucher
Yeah, nuclear. I'm very bullish on long term.
- [49:46]
Nicole Lapin
I mean, it's. It's taken a beat down as well.
- [49:49]
James Altucher
Long term and for. For energy, obviously. So I'm very bullish on it because look, a lot of Europe is powered by nuclear. Hardly. I don't think, I don't know of any part of the US powered by nuclear. I mean, there's probably some parts, but eventually we're going to have to switch to something like nuclear. A. Microsoft is paying to open up Three Mile island, like the only place in the US where there was a nuclear disaster. That's how much the demand for nuclear is. Is starting to come right now. Because of AI?
- [50:15]
Nicole Lapin
I mean. Yeah, because nobody also wants it in their backyard. So are there specific ones that you like? Like smr, oklo, the Sam Altman one Constellation.
- [50:26]
James Altucher
What was one you said smr. They make these small modular reactors. So they're like smaller nuclear reactors.
- [50:33]
Nicole Lapin
But yeah, because there's fusion and fission.
- [50:35]
James Altucher
Whatever.
- [50:35]
Nicole Lapin
We can have a whole other episode about.
- [50:36]
James Altucher
Let's argue about physics on this podcast. We go into quantum physics after that.
- [50:41]
Nicole Lapin
All right, let's round it out. How about Amazon, maybe the new parent company of TikTok?
- [50:46]
James Altucher
Oh, really? I have not heard that rumor.
- [50:48]
Nicole Lapin
Breaking news.
- [50:49]
James Altucher
Well, then I'm very bullish on it.
- [50:51]
Nicole Lapin
Like last minute bid. I think the deadline is this weekend, honestly.
- [50:55]
James Altucher
Don't you love Tick Tock? Can't you just wait?
- [50:56]
Nicole Lapin
I haven't followed you on Tick Tock. Are you dancing on there? You would be great.
- [51:00]
James Altucher
No, I'm not dancing on there. I don't think. I think I took that one.
- [51:02]
Nicole Lapin
I think you could have like a hair. TikTok. I. I have so many questions about your hair.
- [51:07]
James Altucher
I had at least one Tick Tock video with a million views, but I just use it mostly for viewing because this Gen Z generation, it's like they're superheroes. You see people doing like triple backflips out of an airplane and somehow staying alive. Four year olds playing, you know, Beethoven's fifth Symphony on the piano and clarinet at the same time. Like, it's amazing.
- [51:31]
Nicole Lapin
Is it real or is it AI? We don't know.
- [51:33]
James Altucher
I don't know. A lot of it looks real and they're like superheroes. I'm so impressed with the current generation that's coming up. This is going to be a great generation. I can't wait to see what they do.
- [51:44]
Nicole Lapin
Hell yeah. All right, James. We end all of our episodes, as you know, by asking our guests for a tip that listeners can take straight to the bank. I'm an elder millennial. Wait, what are you Jen?
- [51:55]
James Altucher
I'm Gen X. Yeah.
- [51:58]
Nicole Lapin
Yeah, you are. Okay, so from a Gen Xer, what would you tell the kids these days? One thing.
- [52:04]
James Altucher
Don't be angry. Don't ever be angry. That's. That's the one thing.
- [52:10]
Nicole Lapin
Angry @ the market, angry at life. Angry enough to angry.
- [52:15]
James Altucher
Angry at others.
- [52:16]
Nicole Lapin
Cyber Truck.
- [52:17]
James Altucher
It always takes away energy. It never gives you any energy. And you need energy to live in this life. And it's a hard life. So just don't be angry.
- [52:30]
Nicole Lapin
Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan Lavoy. Our researcher is Emily Holmes. Do you need some Money Rehab? And let's be honest, we all do. So email us your money questions, money rehab@moneynewsnetwork.com to potentially have your questions answered on the show or even have a one on one intervention with me. And follow us on Instagram @moneynews. And TikTok MoneyNews Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.