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- [00:03]
A
Did you ever think you were made,
- [00:11]
B
Adam?
- [00:11]
A
What's your point?
- [00:12]
B
The future looks bright.
- [00:15]
C
My handshake is better than anything I ever saw.
- [00:17]
B
It's right here. You are one of one my son's right about.
- [00:21]
A
I don't think I've ever said this before.
- [00:28]
B
Okay, so lots going on. We got to react to last night's speech that the president gave. We have Richard Werner here, the godfather of quantitative easing. We got Luke Roman here on macroeconomics and our microeconomics. We have Vincent Oshana here with us as well. A lot happened yesterday. Right. To give some numbers here before we get into it, Rob, why don't you start off with the clip why don't you start off with the clip on what the president said that made the futures go berserk. This is the exact moment everybody was waiting to see what the speech was going to be. Was there going to be a big announcement? Was there going to be something massive, positive? You know, the Gulf states are going to pay for the war. What was it at the end when this comment was made? I will share with you what happened to the markets. Go ahead, Rob.
- [01:13]
D
To the progress we've made. I can say tonight that we are on track to complete all of America's military objectives shortly, very shortly. We are going to hit them extremely hard over the next two to three weeks. We're going to bring them back to the Stone Ages where they belong. In the meantime, discussions are ongoing. Regime change was not our goal. We never said regime change. But regime change has occurred because of all of their original leaders. Death. They're all dead. The new group is less radical and much more reasonable. Yet if during this period of time, no deal is made, we have our eyes on key targets. If there is no deal.
- [01:55]
B
Okay, S and p futures down 1.448. Dow 1.36. Oil gas prices right now, 112 and 17, 112.17. It skyrocketed. While this is going on, you know, at the same time, we're hearing a bunch of other news that took place. And you know that statement, bitcoin drop. Market's concerned. People are worried what's going to be happening. He did talk about the 4 million, you know, kids in America right now have that Trump account that's been created, which was some of the good news that he shared. But, you know, some people are even speculating that the news was so scary for some people that even the Artemis 2 that went to space yesterday because of the speech, the toilet stopped working. Because now that's Speculation. I don't want you to go fact check me on this and ask, you know, Groko or some of these other things, but people were expecting something else. Richard, why did the market react so negatively to yesterday's speech?
- [02:51]
C
Well, in many ways, there was no news. There was no sort of real new announcement. And to the contrary, there was perhaps. Well, there was disappointment for one. The time scale, the timeline stayed pretty vague. We're told, well, it's going to soon end, but we've heard that before and the wars that gonna end soon and they go on for a very long time thereafter. Yeah, he repeated, as you know, in this clip, as we saw, he's gonna bomb Iran to the Stone Age from henceforth, which is a big task. It's a major country. And actually, didn't he care about the Iranian people? Wasn't that in the beginning, the story?
- [03:32]
B
That's the criticism right now.
- [03:33]
C
All these contradictions. And that's just, you know, that's just tip of the iceberg, I think.
- [03:37]
B
Luke, what do you think? First, what'd you think about the speech too? Why do you think the market reacted so aggressively to Back to Stone Ages?
- [03:45]
A
I think exactly what Richard said were the contradictions. I mean, I received texts from institutional clients around the country. One of them said they should have called this speech stuck. Another one said this could have been an email. But I think why the markets ultimately, I freaked out and then carried through on that. Freak out is what he said about the Strait of Hormuz and the contradiction therein, which is he said something along the lines that it'll open up on its own eventually, naturally, maybe our allies will help us, and the contradiction within
- [04:19]
B
that is, but not really our allies will help us. He even said they got to figure out themselves and we'll help them if they need it. But I think they have it themselves, like almost leaving it to NATO and some of the others to figure out for themselves.
- [04:31]
A
Yeah, I think that's right. And there's a huge contradiction therein. We're the greatest military in the world. We are the reserve currency issuer. Our job is to use our deep water, deep blue water navy to maintain freedom of navigation for the world. That is why the world is a big reason why the world uses the dollar as the reserve currency. And so if we say, hey, this isn't our problem, number one, that starts to raise serious questions about why am I paying the Americans for weapons? Why am I paying the Americans to hold dollars? And then also, at a more fundamental level, if we're winning why can't we open the Strait of Hormuz? If their navy has been devastated, if their air force is devastated, if their offensive capabilities have been devastated, why can no ships sail through there?
- [05:15]
B
Why do you think?
- [05:17]
A
Well, forget about what I think. What I'm being told is that, yes, their navy is destroyed, yes, their air force is destroyed. And this isn't where their power was. Their power was in missiles and drones. And I'm hearing we've destroyed less missiles than we thought. There was a story talking about this on Reuters last week where we originally were taking Israeli intelligence and they were saying, yeah, we got 70% in the first couple weeks. Last week Reuters said, well, it's closer to a third, which means it's probably a little less than that. It's sounding, I'm hearing very credible rumblings that more of their missiles were deeper underground than we thought. And the reality is, is these drones, it's not different for us than it's been for the Russians in Ukraine, which is to say something very important has happened in this last four or five weeks of war in the same way it happened in Ukraine, which is the very nature of warfare has fundamentally changed in a way that has arguably not happened since black powder rifles were used to take down heavy cavalry whenever that was four or five hundred years ago. And that is that Iran is using missiles and drones to stand off the United States Navy in a naval choke point. And so while there's something called Mahan Doctrine, which is you control naval choke points, you control the world. And that has been enforced for four or five hundred years. British Navy. Well, three, four hundred years, British Navy under the British Empire taken over by the American with the United States Navy. Navies have been the ones to control those naval choke points. And here we have in live living color for the first time in three, 400 years, a land based power. And one, oh, by the way, that is probably not even a top five and maybe not even a top ten military standing off the United States Navy in a naval choke point. The relative power dynamic has shifted. So now you have this. I think when you layer that onto what we're looking at with oil, there's this massive markets I think are starting to discount. Okay, there is some sort of major change taking place here and it's going to be a lot harder and messier to reopen this via naval force. I think they're not sailing through because they don't want to wake up. I think Trump most of all. But none of us want to wake up to a scene of a US Naval destroyer on fire or sinking. That's what I think the issue is, Vinnie.
- [07:30]
E
Well, yesterday you made a great point. Trump, the President listens to everything. He reads everything. He's, he knows the pulse. Remember we talked about this and I think, you know, he's, he had to come out and the people around him are like, you're gonna have to go out there and you have to say something and show strength and say that we're on, on, on, on the path. And they let them know that it's gonna go a little bit long and everything. But we were under as a regular American that just follows what he sees and reads. We were told that the first attack was at the summer where we went in, we bombed, it was clean, we left, that was it. We took out all their nuclear launching capabilities. Come to find out now, we were told it was for the people. I haven't heard a single thing from anybody on the ground. Any Iranians. The protesters here are like, yes, we want it, Please help us. The Internet's down. We don't know what the hell is going on. And I think the, the, the miscommunication is, let's just say, ready for this. We take out all their leaders and we keep knocking out all these people that are on top. You think the military, their military, whoever becomes a leader now is going to like, okay, well, follow this guy. These people are very, very stuck on their ideology. They have America in there with Israel bombing the hell out of them. Pat, I don't know. I have a feeling that the president was a mother. He's, he's, he's an alpha, he does what he wants. But the people in his ear, like Lindsey Graham, when Lindsey Graham did a thing on Wall, Wall Street Journal reported he was visiting the President saying, hey, Roosevelt, think about your legacy. Do this bunch of people's like, yeah, let's go in there. Is it going to be like Venezuela? Yeah, let's go in there. And then now we're there and it's like, oh, longer. And what was it? Short term pain for long term game. They kept saying that short term pain. I don't see this not going a year at least.
- [09:06]
B
Do you think it's going to go a year?
- [09:07]
E
I think.
- [09:07]
B
Pat, are you there as well? You think it's going to go a year?
- [09:10]
C
That's the risk that it could be very long, potentially even longer than a year. And really what, you know, from a European perspective, what we currently see, because, you know, as Luke explained, and this is actually not surprising, what has happened so far. I mean, Iran so far had not used its power to close the Strait of Hormuz, but it was always capable of doing that. But it chose not to. Of course, being suddenly attacked during negotiations and its leadership being assassinated and so on. You know, you sort of can see from their viewpoint, okay, well, now we have to do a bit more and they close the trades. In other words, it's not a surprise. So from a European perspective, actually what's really happened now is under President Biden, the number one energy supply line to Europe was cut. The Nord Stream 2 pipeline from Russia to Germany under President Trump. Now, the second lifeline of energy has been cut, which is through the Strait of Hormuz. So really what's happening and none of that is sort of a surprise. You know, if you sort of take these actions, this is the result reveal preference. We have to assume that's what those behind the scenes who advise the President want it, because it's not surprising. So really, one of the goals seemed to be to totally de industrialize and destroy Europe. I think we're witnessing the implementation of the Morgenthau Plan proposed by former, well at the time, the Treasury Secretary, Henry Morgenthau, which was that after 1945, the post war era, Germany needs to be totally annihilated. The industry needs to be taken out, needs to be deindustrialized, degrowth, although they didn't use that word. And even the population needs to be replaced. And that's the program that seems to have got into motion with the delay. But from 2015 onwards, and now it's really, you know, on steroids. And that's really what's happening now. You'd expect that there'd be somebody in Europe who said, well, hang on, hang on, what's going on? We've got to find solutions. And of course, President Trump in his speech yesterday did say, well, you know, okay, this is what happened, this is happening and we continue to do our job, looking after the Strait of Hormuz and energy supplied Europe. Well, that's Europe's job effectively. You know, he's saying, so they should take care of that. And if there was sort of proper leadership in Europe, then they could now take the necessary steps. And yesterday, you know, actually April 1st, there was a great message on social media saying, oh, German government announcement by the Chancellor, we're going to build 15 more nuclear power plants. We're going to rebuild the Nord Stream 2 pipeline. We're going to get energy here, we're going to change our Energy policy to make sure we've got all the energy. It was an April Fool's Day joke. You know, listing sensible policies in Europe has become an April Fool's Day joke. Can you believe it? Because this is not what Europe is saying. So what is happening with where is European leadership in this? They're just watching as the European economy gets decimated in a bigger scheme in which President Trump is playing a role. And you could argue he's looking after America because America is going to get a lot of demand now from the world for energy.
- [12:50]
B
And he said, you guys can come to us. We have unlimited supply of oil.
- [12:53]
C
Yeah, exactly. And this is something that I think in the current debate still is not really discussed enough. And too few people are aware of this, including I think the advisors around President Trump, that essentially what happened is in the whole post war era, Germany has never become a sovereign country legally. It's still an occupied territory. The occupation statutes are de facto still valid and are being used by the deep state, the US Deep state. And you know, there's no peace treaty in the UN Charter. Germany is still an enemy country. The constitution is still suspended. It has, you know, what is done for occupied countries only basic law. It's not a sovereign country. And the leadership is essentially there to administer the zone for the occupation powers. And of course, you know, it's the biggest occupation force in the world is stationed in Germany. U.S. troops, 70,000, 80,000 troops. And of course it's a major platform also for the Middle Eastern warfare via Ramstein and other US Bases. The CIA bases in Germany, they love it because what they do there, unlike when they do stuff in America, in Germany, they can argue it's legal. When they do stuff here, it's technically illegal because they don't actually see it doesn't have the powers it's using, as Fletcher Prouty showed in his great book the Secret Team. And he was a critic, he was an insider. You know, he was the chairman of the joint chief of staff of Covid operation for charter of Covid operations. And so the deep state has been using this as a power base also against President Trump early on. Because in Germany they can do whatever. So. And as part of this agenda, the EU was created. Now a lot of people think, well, Europe has all these great democracies. Now with Germany, you see, it's not true. It's an occupied territory, there's an occupation administration. But also for the EU in total, this is not true because a structure was created, this European Union with the European Commission now you do have a European Parliament that gives the impression, oh, it must be a democracy. But you know what this is modeled on? These documents have been declassified. It was a CIA plan to create a United States of Europe, which they then called, you know, European Union. Sometimes they do say United States of Europe. This was in the, the post war years. So from, you know, 47, 48 onwards, you've got a lot going on in the 50s and 60s. And all the key guys, the founding fathers of Europe, actually now revealed as a matter of public record as CIA agents. Jean Monet, you know, if you've got buildings named in Brussels and streets named after these people, they're all CIA agents. Their goal was to create this dominance by the deep state that exists over Germany as an occupied country, over the whole of Europe, sort of extend that. And this has happened. Now people think, well, there's a parliament and there's a proper structure. What are you talking about? This is democracy. No, the CIA always had this chip on the shoulder and was always jealous looking at the KGB and the Soviet Union and this central planners love the Soviet Union system. It's a central plan system, right? And they use that as a model. And that is what the EU is modeled on. You see, the Soviet Union technically was a democracy. Of course, we all laughed. That's a joke. Well, they had a parliament, so what's the difference? Well, the parliament wasn't full of lawmakers because they couldn't write a single law. All the laws were written and proposed by the politburo, which was unelected central planners. That is the model they chose. So the European Parliament is. There's no lawmakers there, they're highly paid, they call themselves members of parliament, but they haven't proposed a single law. They haven't written a single law. 100% of the laws are written and are proposed and then pushed through by the unelected politburo called the European Commission, these commissars. It's the Soviet central planning system. So we have actually a dictatorship in Europe. And it was established by the deep state, by the CIA, and, and is run by the CIA. And that explains this big puzzle. I mean, what's going on? Why are Europeans allowing this destruction of Europe? You know, European civilization was the source of democracy. And the idea of individual freedom actually comes from Europe, but it's been annihilated. And that's what's currently happening. Now. The energy supply gets cut off. Now the last, you know, the big source of independent energy supply for via the Middle east is now being threatened. And it looks like it's the plan to actually do nothing about it and let this cause a major, major disruption, not only of energy, but also food supplies, fertilizer, all these things.
- [17:44]
B
Is it for Trump to show how much power he has?
- [17:48]
C
I think President Trump, President Trump's role in this is ambiguous. I did believe him when he said early on and in the election campaign that he doesn't want these wars. And we all sensed, you know, that's his opinion. So what happened, there are clearly powerful forces around him that have moved him into this position. And it looks like he has no choice. And he didn't look entirely happy yesterday, even though, you know, these were bold words. But I think a lot of people got the sense that he, you know, he's not really happy about what's going on. This is not his ideal scenario. So it looks like, though, that these planners that are making these plans and, you know, we've heard about this for so many years. We need war against Iran. We need war against Iran. This has been said so many times under doesn't matter who's president. That's been around as a major policy force. And it looks like Charlie Kirk was the first casualty in this campaign.
- [18:47]
B
You're going there.
- [18:49]
C
Well, you know, he was very much against this war.
- [18:51]
B
You think you're saying Charlie could have been a casualty in this?
- [18:54]
C
It looks like it. You know, just look at guy like, amazing investigation done by Candace Owens. Yeah, she's done an amazing investigation. Asking questions.
- [19:03]
B
Right.
- [19:03]
C
And you know, we should be allowed to ask. That's in fact the phrase from Charlie Kirk himself. We should always ask questions.
- [19:08]
B
Right, right.
- [19:09]
C
And he was close to President Trump. He had clearly a lot of voting power, young people. And he continued, particularly in the last year of his life, to argue stronger and stronger, don't do this. We don't want to get into this quagmire war against Iran.
- [19:26]
B
But now that he is in here, what I'm trying to find out from you is who has power now? Who needs who Now? Is NATO getting so desperate that they're going to go closer to China? They're going to go and say we got to figure out. It would open up this relationship with Russia.
- [19:42]
A
They're ordered.
- [19:43]
B
Where are you at?
- [19:43]
A
Yeah, natural. Just headline yesterday on Reuters, European Union natural gas imports from Russia up 22% year over year. So that's where it's going to push them, I think on some level is they're desperate for energy, to Richard's point. And the hard part is Energy and food are higher on Maslow's hierarchy of needs than stocks, bonds, et cetera. And the nature of the economic system we've had over the last 30, 25 years. In particular, there's something called the net international investment position. It's simply a tallying as a balance sheet of how much do foreigners own of US assets versus netted against how much we own a foreigner's assets. And in the first Iraq war this number was probably positive 7 or excuse me, negative 7% of GDP of US GDP. In other words, foreigners owned roughly 7% more of US GDP of our assets than we owned of theirs. No big deal. Second Gulf War the number was probably up to 10, maybe 12%. Great financial crisis the number was probably 15%. Since the great financial crisis, we have not had so much a recovery that has been talked about. Well, the US has recovered so much better than the rest of the world. Yes, nominally. But what really happened can be seen in, in this net international investment position balance sheet, which is we went from a negative 15% of GDP net international investment position to today we're at negative 87%. So we didn't recover. We just hocked our family silver to China, to Europe, to Japan, to everybody that ran trade surpluses against us.
- [21:21]
B
The average person that paying attention to the simplified for them. Why is this so important?
- [21:25]
A
Why is it so important is because by cutting off European energy and Southeast Asian energy, what this means is that they now have no way to get enough energy. They're going to have to pay a lot more for energy and they will do anything to get it. What are they going to do? They own $70 trillion in US dollar assets gross, $27 trillion in US dollar assets net. They're going to sell stocks.
- [21:53]
B
Who's they?
- [21:54]
A
The whole rest of the world, Europe, China, everyone that is short energy.
- [21:58]
B
Are you going to de dollarization? Is that kind of where you're going right now too?
- [22:01]
A
Well, it's not even de dollarization. It is simply a desperate reaction. If you're, you know, you have a pile of stocks and bonds, you lose your job, you need to feed your kids. Do you let your kids starve or do you sell your stocks and bonds to feed your kids? That's not even a choice. That is the position Europe is now in. That is the position Southeast Asia, Japan. And this is why you can see in this people thought when this war started that treasury yields long term treasury bond yields would drop, right? Risk off. What have they done? They've gone straight up at the fastest pace. In a long time. And they're going to keep going up. You are going to have an oil shock where rates go up, stocks go down, and it's going to devolve into a severe. People are saying, well, we're in the best position nominally vis a vis energy. Absolutely. But this is going. The world is connected in a way. It is going to spiral into U.S. asset markets, bond yields, borrowing costs, they're all gonna go much higher. And it all ties back to Richard's point of now the second energy lifeline is cut. So now they're in a desperate situation. The Europeans have been running surpluses against America for what, 50 years, 70 years, 80 years. And a lot of those surpluses have been deployed into US Stocks and bonds. Now they're gonna. That's their rainy day fund, that's their piggy bank.
- [23:18]
B
And you, what you, you run, what business do you run? You have clients, institutional clients. So maybe walk us through what business you're in.
- [23:24]
A
So I'm a consultant. I'm a consultant.
- [23:25]
B
Okay.
- [23:26]
A
I'm a macroeconomic consultant for institutional high net worth and sophisticated individual invest.
- [23:32]
B
What are they asking you? What questions do they ask you and how do you consult them? It's not a fee based model, it's
- [23:37]
A
a subscription based model. So it's, it's. I write two reports a week and I basically am focused on current events and the implications for markets in these types of manners.
- [23:48]
B
Where do you stand with what's going to happen with the market next, with everything? With gas for. Okay, if it's at 112 right now, we know gas is probably going to 425 to 450. We're going to start seeing five some places. If it continues like this market's dipping market. Has a market opened up yet, Rob or no? What is the market right now? If we look it up, it's got
- [24:08]
A
to be down big.
- [24:10]
B
Okay, the market right now is down. Dow is down 667. So Dow is down a 4, NASDAQ 2 points, S&P 1.46. What do you see happening next?
- [24:26]
A
If you look at the drop in oil consumption, right, this is an implied, this is a supply side drop in oil consumption. This isn't because we're in a recession. And so demand has dropped. If you look at oil consumption year over year globally, going back to 1965, global oil consumption has only been negative three times. 1973 oil shock, it was down 1 to 2%. Going from memory, the 1980 double dip recession that we had here in the US 15, percentage rate, interest rates, etc. It was down 4.3% year over year. And in Covid, when we shut down the world it was down 9.2% year over year. Right now, the oil supply out of the Gulf, depending on what net adjustments you make for strategic petroleum reserve rundowns, et cetera, we have lost roughly 7 to 11% of the world's oil and it's supply side. What does this mean for markets the world? This is going to sound hyperbolic, but it's not. It's literal math. It's guaranteed balance, double entry bookkeeping math, supply chain reality. The world economy cannot survive a 7 to 11% loss of oil supply. It will not survive. We can debate is Europe going to go first and collapse? Is Southeast Asia going to go first and collapse? Will America collapse first? But the global economy is, it is a certainty it will collapse. If we keep oil supplies down, what's
- [26:02]
B
the likelihood we go, we go there and we stay there. What's the timeline like if we go to 7, 11%? For how long?
- [26:07]
A
Well, we've been there for six weeks and I think if we get to mid April, like you're already seeing flights. I just woke up this morning a discount airline out of London, Gatwick canceled all flights, can't get fuel. So now you're going to start having tourism fall. Do you agree with fly chains?
- [26:23]
C
That's very true. It was announced in the UK that the last shipment of kerosene was just made this week and there's no further known shipment arriving in the uk which is pretty crazy. But it also tells you that this is a policy outcome because nobody seems to care. There's no countermeasures, there's alternative ways. There's things you could do if you wanted to. They don't. Why? Because this feeds into this other agenda that's ongoing and that we mustn't forget. We mustn't take our eyes off that. And that is, you know, I've just explained sort of the background with the European Union. It's actually central planners wanting to centrally plan more and more and it looks like they're going to use this opportunity to impose digital controls and the types of restrictions of individual freedoms that will be at least as bad as during this Covid psyop or worse. Of course now under the excuse of oh, there's no energy, you have to stay at home, you can't use your car.
- [27:25]
B
You think that kind of stuff is possibility?
- [27:27]
C
It looks like that's what they want because there were so many policy decisions actually ahead of this, you know, closure of the Strait of Hormuz that already indicated that actually they want to restrict energy usage.
- [27:41]
B
This is true. This is European.
- [27:43]
C
This is the European administrators, I wouldn't say leaders, because they're not really the decision makers.
- [27:48]
B
But who's debating them? Who's arguing with them and disagreeing with them?
- [27:51]
C
Nobody's arguing with them because, you know, it's a dictatorship. When the European. They can do anything, they can put somebody in prison without legal cause, they can sanction people without legal due course. And that's what's happening already. You know, that's why they're cracking down on freedom of speech. You know, this digital service today.
- [28:12]
B
Where do you live today?
- [28:14]
C
Switzerland. Spending time in Hungary as well.
- [28:17]
B
You feel safe there so far?
- [28:19]
C
Yes. But, you know, Switzerland is also under enormous pressure from the US and from the EU to cozy up to them and essentially implement whatever they are doing. There's this, you know, legal framework.
- [28:29]
B
Are you seeing friends and family leaving? Are you seeing friends and family leaving the eu?
- [28:34]
C
Well, I think a lot of what I see is a lot of people thinking, should we stay within the eu? There's a lot of Germans who want to move away. And also they're sending, first of all, they're sending their money out. And it's not because it's some kind of hidden money, black money or anything. No, this is post tax official monies. Just don't want the German government to. And they're talking about it taking people's money, you know, that's how bad it is. So in other words, yes, what we see is the imposition of controls and restrictions under this excuse. It's almost as if it's welcome that the Strait of Hormuz is now being closed because these administrators in Europe who are running the show for the deep state seem to have been given the task sheet to implement controls anyway. And it's like, oh, great, we have this fantastic excuse now. Oh, it's too bad we're out of kerosene now. And yeah, so now it's just, there's no choice. We have to do this. And of course, they will blame it on President Trump, they will blame it, you know, on all sorts of other forces, but they, they love it and they're doing nothing against it because literally you could change the situation dramatically. President Putin has repeatedly told the Europeans, you notice that operation that was done. The terrorist attack on The Nord Stream 2 didn't completely destroy all the pipelines. There's one pipeline that is Intact, we're happy to open it and deliver, even at the original price, that the contract that was made was signed a long time ago, which is super cheap. You know, he said that. What's the reaction? And essentially, they're not allowed to say, yes, please.
- [30:11]
B
What advice would you give to President Trump today? If you're in his ear, he asks you a question, what do you tell him you're with him, you say, hey, Richard, so what do you think I should be doing?
- [30:20]
C
Well, I think he should go back to what he promised the American people and what they loved him for. You know, the things he said originally that he doesn't want. These forever wars. This one has all the makings of another forever war. 20 years, Afghanistan. I mean, pretty crazy. So go back to what they love you for. And I believe that's really who you are, that's what you really want. Let's all work together and get the real President Trump back. And there's things he can do. Of course, there's opposition forces. The deep sea is very, very powerful. We've seen that. And is empowered and is using the power bases, including the eu, as quite a serious opponent. There's his sponsors that have paid a lot of money, and we know how they feel. They gave a lot of money to Charlie Kirk and they feel they owned him. And then if you do something they don't like, they feel it seems they have the right to do all sorts of things, certainly threaten him, as Candace Owens has documented, you know, happen.
- [31:25]
B
Are you the same place where he's
- [31:26]
A
at, broadly speaking, yeah.
- [31:28]
B
Really? Yeah, really. Okay, so what would you say to the President?
- [31:32]
A
I would say get back to what you promised to do, which is reinvest in America, reshore the defense base. We are. I mean, he said yesterday in a different speech where we can't, we're at war, so we don't have money for all these other things. I'm paraphrasing, but there's this constant refrain from everyone in America that we have to outperform China. China is catching us. China is at risk of winning in this, or China is at risk of winning at that. Well, how did China do that? China did not go into and spend 8 trillion or 10 trillion dollars in stupid foreign wars that really didn't have a point. They invested in themselves. And so I would say to President Trump, stick with what you said you were going to do. Stay here, redirect money into our domestic industrial base, into our domestic infrastructure. He's done a great job with borders. He's done. I think a lot of what they've accomplished under Secretary Kennedy has been very admirable, very supportive of that. This is just such a out of left field turn. I don't, I don't fully understand it. And I would just encourage him to get back to why are we investing, you know, $200 billion there? They're looking for incremental to support this. Right. Why are we not spending that 200 billion in domestic infrastructure growth? There's a whole lot of ways you could spend the money.
- [33:01]
B
See, I thought he was going to come out and say the Gulf states are paying for the $200 billion. I thought he was going to come out and say, hey, this war is going to be paid by the Gulf states because, you know, the $18 trillion. You were going to say something.
- [33:12]
C
Well, of course, I entirely agree with Luke and I would add that actually there's a lot of things you can do where you don't have to spend money or essentially almost no money. And you can really just change the change. World history, namely, you know, deliver what people would love, and that is prosperity and abundance. How well, what delivers prosperity, and we talked about this, and you've talked about this is you need to create more banks. And that's very easy because, you know, it's a leveraged model where you just, you just need a little bit of capital. You set up a new bank and the bank will be able to lend 20 times as much. China did this. This is the secret of the Chinese success. Well, why is only China delivering 10% growth every year? GDP. The US can do it. There's nothing to stop the US but we need to increase the number of banks. Actually, what is happening is the number of banks keeps going down.
- [34:11]
B
You know, it's funny credit to you. Last time you and I spoke, when you talked about the history with China, I made a video about that. And what I noticed is that us went all the way up to 14,000 banks. I don't know what we're at 4,500, 4,300 today.
- [34:23]
D
Yes.
- [34:24]
B
And a lot of these guys are being picked up. You know, a lot of the bigger banks are picking up the smaller banks. So you're going back to start lending more money to create more small businesses. You're going back to basic fundamentals.
- [34:34]
C
Exactly. Now, when America was in its high growth phase, 15% growth, 20% growth, and we're talking the second half the 19th century, it had tens of thousands of banks. I think at the peak, it was like 40,000 banks. We were down to 5,000 banks and falling in every state. In Ohio, you know, the number of banks is going down and down as they're being forced by the regulators to close. And they think that's a good thing. No, it's not. It's only a good thing for the central planners who want to give us zero growth degrowth because they want to restrict everything. Scarcity is their model that increases the power of the allocators. But actually what we need is to implement what America was created for, individual freedom and the ability to implement, you know, through hard work, to implement things that give us abundance. Now you need the right financial framework and America used to have it. Tens of thousands of banks. Germany used to have almost 30,000 banks just 100 years ago.
- [35:37]
B
Just Germany?
- [35:38]
C
Yes, just Germany. Wow. And then of course, who had more, by the way?
- [35:42]
B
Because I don't think China ever got to a number like that.
- [35:44]
C
That's correct.
- [35:45]
B
Who had more than what country?
- [35:47]
C
Well, the US had at its peak more in the 19th century, 14,000.
- [35:52]
B
Can you type in what's the most bankruptcy?
- [35:54]
C
That's a recent number. That was very recent. You know, 40 years ago America had 40 years. I'm talking about 120 years ago.
- [36:01]
B
Oh, wow.
- [36:01]
C
That's when America had Double digit growth,
- [36:03]
B
$100 small business loan.
- [36:05]
C
100 years ago there was even an era. And I think we should really go back to the era of free banking where everyone is.
- [36:10]
B
Yeah, There you go. 1984 we had 14,000. But can you do me a favor? Ask the question, how many banks us had 100 years ago? Rob?
- [36:17]
C
Yeah. 1884.
- [36:19]
B
1884. Check like 1884. Please continue.
- [36:22]
C
And so the model used to be at some stage in America that you could just set up a bank. Even in the UK you could just go to the post office, you pay five pounds, which was of course much more money than nowadays, and you could register a new bank. You see, and that's what we need to do. We need to make it easier to set up banks. We need to switch to a registration procedure. If you meet certain criteria, you've done it, signed off by an auditor that you've got it, you, you automatically get your license. At the moment it's the bureaucrats humming and haing and yet.
- [36:52]
B
But somebody may push back and say, okay, Richard, you're the godfather of quantitative easing, right? You came up with quantitative easing. Some may say that created a lot of issues. If we loosen up too much. Like if you go back and look at, you're saying hardcore deregulation. A lot of these banks that did the no income, no assets loans, the WAMUS went from 330 billion to 1.9 billion. All these guys, that was kind of part of the problem. No, yes.
- [37:18]
C
It was the wrong type of bank lending. And my original quantitative easing was for the central bank to help the banks that are doing the real job, which is business lending. There's three scenarios, three types of lending and three types of outcomes. When banks lend, they create money out of nothing. I did the first empirical study in a 5,000 year history of banking proving that, because that was considered the conspiracy theory by those who didn't want the public to know the reality that when a bank gives a loan, even a mortgage, the money for the mortgage, the money for the loan is newly created and the bank is allowed to add it to the money supply. And everyone can figure out, well, if they're adding new money, that has an impact, there is consequence.
- [38:00]
B
What is their back end? Is it 40 to 1? Because I know insurance company, for every
- [38:04]
C
dollar out of nothing, it is, there's no ratio.
- [38:06]
B
But do you know the number?
- [38:07]
C
That's the fractional reserve model, which is also not the reality.
- [38:10]
B
Fake. That's not real.
- [38:10]
C
The reality is 100% of the loan money is newly created by the bank. That's how it works.
- [38:15]
B
But how much do I need to have in reserves to be able to lend it out? For every million dollars, what do I need to have in reserve?
- [38:20]
C
Look, in many countries the reserve quantity is zero, which, can you check that?
- [38:24]
B
Which proves, I remember one a few
- [38:26]
C
years ago, England, Sweden, Australia, the reserve quantity is 0. The reserves are not really what's holding things back. We have currently in many countries the capital adequacy model, where capital is a limit, you know, and anyway, you know, that's really beside the point because most banks are far below the maximum they're allowed to lend. So there's no point even discussing, oh, you know, how can they, you know, what's holding them back? Well, it's not the capital that's holding banks back. Actually the regulators have made life very hard for those banks that do the productive lending. So let me just explain. There's three types of lending. When banks give a loan for asset purchases, which is, well, if you're buying an apartment, land, real estate, property, but also financial assets, all the lending to hedge funds, they're leveraged. Private equity is leveraged. All these loans, you've got money creation, but you're not adding to value to the economy. Therefore there's no impact on GDP because you're just transferring ownership and assets, but at the same time, because you're creating new money, it has an impact. What's the impact if you suddenly create a lot of money and pump it into the real estate market? You don't need to study economics to know what's going to happen with real estate prices. And of course the banks usually behave like each other because of the various regulatory influences. So then when they start doing that, you get a real estate boom, property prices go up. If they start lending more for hedge funds, you get an asset market, you know, financial market boom, end of that. So this is unproductive and unsustainable credit creation which creates the asset bubbles that lead to the banking crisis. And we've had so many, you know, more than 100 in the past 50 years alone. That's just one of three scenarios. When banks create credit for consumption, that means you've got more purchasing power, more demand for consumer goods. But you don't have more consumer goods. You get inflation, consumer price inflation. That's what they did in 2020. And I want to actually make the link now to what's going to happen next because I think we're going to see another bout of inflation. Just one moment, hold that thought.
- [40:32]
B
I'm going to let you wrap it up. I just had Rob ask the question. I asked the question. I sent him the question. In order for a bank to lend a million dollars, how much money do they need to have in reserve? I know there's a minimum for insurance company, but what is it for banks? The old rule pre2020 was 10% deposits. You know what the new rule is? 0%. Are you kidding me?
- [40:52]
C
Well, I told you.
- [40:53]
B
What do you think about this? This doesn't make any sense.
- [40:56]
A
That's how they got out of 2020. That was. They did. There was a QE without QE, but
- [40:59]
C
that's being re in many ways, even when there were official reserve requirements. Because when you are the creator of money, what is it to say, oh, there's a capital requirement, there's a reserve, you're creating the whole money supply.
- [41:11]
B
So if you want. Are you supportive of this?
- [41:13]
C
What I'm supposed. Okay, let me say the third thing and then I can tell you what I'm supportive of. So the third possibility is when banks give a loan to entrepreneurs. Entrepreneurs like you on brand is like your audience. You know, business people who are working hard, are implementing new ideas, are adding value, then this is really what banks should focus on. What you then get is prosperity. Growth, job creation and no inflation and no negative consequences. That's what we get. We get higher GDP growth. So we've got these three scenarios. And what I'm saying is I'm supporting bank lending for business investment, especially to small firms, because that's almost always a job creator, it's almost always productive. Large firms, well, they don't really need bank loans. You know, they go elsewhere, they get access to capital markets and so on. And also often it's all about rationalization and they reduce stuff, you know, so it's really the small firms. And the small firms is crucial because there's 70% of employment across the globe in every country. In some countries, more than 70% of employment is for small firms. And so I'm saying, and my original quantitative easing was to kickstart that bank credit for productive business investment that delivers job creation, prosperity, GDP growth. And that's what we need to do. And that's what we need to set up banks for. And if it's a bank that will lend only for business investment, why should there be strict reserve requirements or capital adequacy requirements or regulatory requirements making it hard to get the license? You know that there's never been a banking crisis due to too much lending by small banks to small firms. You know, big banks don't lend to small firms. Only small banks lend to small firms where we need many small banks. There's never been a banking crisis due to small firm business lending because that is productive and there's no downside. And that's what we need. And if you set up a bank that's going to do that, you here's the license. That's how quick it should be and how easy it should be.
- [43:18]
B
What's the risk? Though you prefer 0%, you're talking still
- [43:23]
C
about the reserve requirement. Why are we still talking about the reserve? Okay, it's not the Jeffrey Epstein list, but it is a misunderstanding. You know, the reserve requirement model was taught in textbooks until the sort of 70s. Since it's been replaced by the financial intermediation model where they say, oh, there's nothing to see here. Banks don't even create any money. So in that sense it was more true than what they're now teaching. There's no money creation. Banks don't create money is what they're teaching now. All the leading textbooks, finance professors, the finance journals, which is totally wrong and disproven. And before was this fractional reserve model, but it was just a measure to lead the conversation away from credit creation because this fraction reserve model still argued that each individual bank receives deposits, does its analysis and lends out money. And then in aggregate as they interact, there's this fractional reserve money multiplier money creation going on. That's not true and I disprove that. It's published and you can look it up. It's open access paper, the most downloaded academic paper of any Elsevier publications across all disciplines. Can banks individually create money out of nothing? And of course I do the analysis on my substack rwerner.substack.com where I analyze current events.
- [44:43]
B
Put the link below, Rob. And by the way, if you're watching this right now, if you're really enjoying this conversation, Richard Werner's on Manect. If you want to ask him any questions. We're going to put his QR code around here and the link as well. And the 51% of you that enjoys the podcast, you watch it but you don't subscribe. We would appreciate if you click on that subscribe button, we are this close to 3 million, we can do it with you. So if you don't mind taking a minute, subscribe to the channel, that'd be great. I'm gonna come to you. Everything he just said, how do you process the information of what he's saying? Because for me, what it's making me think about is the following. Are politicians lying to us about affordability because what really needs to be done could potentially crash the market? Or is there a real fix without needing to crash the market? Cause sometimes you're like the next person gets elected. What's the right thing to do if I do that? My poll numbers. My this, my that. So guess what? Kick it to the next guy, next guy comes in. Well, when I get elected, we gonna fix the national debt. Kick it to the. Well when I get elected. And then eventually nobody actually does what they're supposed to be doing.
- [45:44]
A
What do you think what he's saying is exactly right? You don't need to crash the markets to do it. To the contrary, his plan would send the market soaring. GDP soaring on low inflation.
- [45:54]
B
Wouldn't that make the rich rich or poor poor? Wouldn't that make me.
- [45:56]
A
No, no, it would actually do the opposite. And the reason why no one wants to do it is for that exact reason. It's actually a much more decentralization of the so called K shaped economy we have. It would take the legs of the K and narrow them actually in a mutually beneficial way. Right. It would be basically like that with the lower leg Growing faster than the higher leg. But it would be the best of all worlds. But the very reason they don't want to. It's ultimately about political power. What he's really saying and why they don't want you, the policymakers, the central bankers don't want them. This discussed, the credit creation discussed is what happens. There's a great quote from, from Henry Ford. I believe it was a hundred so years ago. So that it's all, it is all. Well, that the public does not understand how money's created. For if they did, there would be a revolution by morning.
- [46:56]
B
I think that's in Ron Paul's book, if I'm not mistaken.
- [46:59]
A
Yeah, I think, I'm sure, I'm sure it is.
- [47:00]
B
Put it in there.
- [47:01]
A
There it is. Well, yeah, it is well enough that people in the nation do not understand our banking and monetary system. For if they did, I believe there would be a revolution before tomorrow morning. Henry Ford. And that's ultimately the issue because think about the implications of it, what this does to people's psyches. I'm a Republican, I'm a Democrat. The left is to blame. The right is to blame. The left can fix it. The right can fix it. No, they can't. Because if you control the ability to create money. There's another great quote by Meyer Amschel Rothschild. Give me control of a nation's currency and I care not who makes its laws. That's what Richard is ultimately saying. And so it's really about. Yes, in our system, the politicians say what they say on the campaign trail because they need to vote. The billionaire and the average Joe on the street both get the same vote. Once he's in office, everything changes. The guy on the street they don't care about, while the billionaire has extremely much higher political power than the guy on the street. And so what is the interest of the billionaire is to continue to control and gain power. And I'm not picking like, listen, I do a great business. I'm not discriminating against billionaires by saying this. I'm simply just using that as an example. But those people in power want to contain, continue to be in and grow their power. And the way you do that is by controlling the money supply by, by, by, by constricting control of the growth of them.
- [48:29]
C
Ryan Reynolds here from Mint Mobile.
- [48:30]
B
I don't know if you knew this,
- [48:31]
C
but anyone can get the same premium wireless for 15amonth plan that I've been enjoying. It's not just for celebrities.
- [48:38]
B
So do like I did and have
- [48:40]
C
one of your assistant's assistants.
- [48:42]
B
Switch you to Mint Mobile today.
- [48:43]
C
I'm told it's super easy to do@mintmobile.com
- [48:46]
B
Switch upfront payment of $45 for 3
- [48:50]
C
month plan equivalent to $15 per month Required intro rate first 3 months only, then full price plan options available, taxes and extra feeful terms@mintmobile.com and also controlling the narrative because this knowledge has been suppressed and you know, I've had to fight against all sorts of suppression of my work in, you know, in the last two decades. The policymakers, or let's say they're handlers in the background and the billionaire class, they don't want people to realize that we and you know, politicians should really love this we. The truth is we can have high sustainable, sustained economic growth, double digit growth without inflation, without crises and fairly equitable. So everyone gets a share. Everyone who's working hard, everyone who's contributing the hard work will be rewarded. Now that is capitalism, that's freedom. And you don't need the restrictions and scarcity, the rationing where then the allocators have all the power and they decide oh there's going to be allocated here and oh sorry, we are now out of kerosene and we're going to allocate. And of course the private jets of the decision makers will still work. So when you have scarcity, the central planners love it. And we saw that in the Soviet Union which is all about scarcity and the central planners doing the allocation. But the opposite is the American model and the American dream implemented and it used to work very well and deliver 15% growth, 20% growth. When America moved from a developing country, emerging market to the number one power in the world, it was on the back of the same model which later was then introduced in East Asia and also China introduced. Well, why is America forgetting this? Germany used this and America used this in the 19th century so we can have this high growth and prosperity without any downside and markets will love it. So why is this not happening? Is exactly as Luke says.
- [50:48]
A
Well think about Germany in the 1800s who didn't like what Germany was doing. Germany was running very much an Anglo American economic model until I believe the crisis of 1873 in which they took a step back. Germany, they, Germany said wait a second, this makes no sense. And they then pursued very aggressively the model that Dr. Werner is talking about. And they outgrew the UK. They had massive growth, massive productivity, low inflation increases, every massive prosperity. But it began to threaten the British Navy, the British Empire.
- [51:23]
C
Well they felt it didn't actually threat.
- [51:25]
A
No, it didn't, to be clear. That's right. Yeah. The British began to feel threatened by it, to say, to state it more
- [51:30]
C
accurately, including these beautiful cities that were created and, you know, the cathedrals built and the prosperity is so visible, which explains this totally unnecessary carpet bombing of German cities, you know, which was a war crime, is actually so that the world doesn't see this prosperity for ordinary people. You know, these fantastic buildings, the Berlinda,
- [51:50]
A
Baghdad Railway, they, they were, they were doing a. The Silk Road of China. The One Belt Run Road was that.
- [51:56]
B
I have a hard time with that. I'll tell you why. Because right now you saw what happened with AI, right? And you got the reports that came out. And Rob, I don't know if you have the stories or not where, you know, Oracle is letting go of, I don't know, 20 to 30,000 people. Meta letting go. And everybody's like, well, you know, Jack Dorsey announced he's firing people. Letting go of 4,000 people. Stock goes up. Meta stock goes up. Oracle, you know, they react positively. And so if all these guys. And by the way, Mark Andreessen, respect to him, he came out and said something. I don't know if you guys saw what Mark Andreessen said yesterday. Did you see what he said about the whole sheet? Okay, Rob, if you want to play this clip, because this is going to lead to a question for you guys to see what you'll say. Go ahead, Rob.
- [52:38]
F
Yeah. So you have friends, I'm sure, who were great coders before AI and are now using AI for coding. What's the thing that they all report?
- [52:46]
C
Far more productive. They couldn't live without it.
- [52:51]
F
And are they working more or fewer hours than before?
- [52:55]
B
Fewer.
- [52:57]
A
More.
- [52:57]
F
More. Yeah. So this entire labor displacement thing is 100% incorrect. It's completely wrong. It's classic zero sum economics. It's the lump of labor fallacy. It happens over and over and over again. It's always been wrong. It's going to be wrong again.
- [53:12]
C
I believe it for mediocre people. And I know that sounds very judgmental and horrible, but most social media managers, Mark, are crap. Okay? I'm getting in trouble for this, not you. They're crap. If you get a social media tool that is AI driven and can replace an average social media manager for AT&T, surely you'd do it.
- [53:30]
F
I don't say this to be insulting, but it's the classic Marxist analysis, which is there's a certain amount of work to be done and neither the machines do it or the humans do it. And so surely those jobs go away. The answer has to be, and this is technology has always done and this is what AI is going to do. And this is why I went through the long description that I did of the, the hyper democratization of AI. Every single one of those people who's a social media manager today now has AI. They all have AI. They all have AI or they're about to have AI and they're going to have it at their fingertips. And if they want to, and then anything that they want to do in their life, in their work, in their career, in their profession, in their job for the rest of time, they're going to be able to use AI to do those things and they're going to be able to use AI to become a better version of themselves. They're going to be able to use AI to be able to learn new skills. They're going to be able to use AI to become more productive at work. They're going to use AI to be able to not do a lot of the grunt work they're doing today so that they can do higher value work. And then now I'm just talking classical economics, which is just kind of the other side from Marxism. Classical economics says that the actual function, the actual economic function of technology, and this includes AI, the actual function is to raise productivity and specifically to raise marginal productivity of the individual worker. And again this has happened many, many times. You take an individual worker who used to write on pencil and paper and you give them a typewriter and then they used to write on a typewriter
- [54:39]
B
and then you get the pause. I'll read the rest on what he says. He says essentially every large company is overstaffed. It's at least overstaffed by 25%. I think most large companies are overstaffed by 50% and I think a lot of them are overstaffed by 75%. So what does this mean? You know, we saw what Jack Dorsey did laying off 40% of them. Rob, what was the average salary? I know meta was 379. What does Oracle's average salary? Payout is. What is the average salary at Oracle? Oracle is 139 to 400. Meta was 379. So if these guys are letting go these jobs and listen, we don't need them. Profits going to go up and you know, Bloomberg story says more than half of US's AI will likely harm them. This is a Bloomberg poll. More than half of them are worried about this. This is a real number, 70% of Americans think advancement of AI are likely to reduce job opportunities. 14% more than they said last year. 7% said they think advancement in AR likely to increase job opportunities. But that's only 7%. Right. Okay. So if you're saying, you know, the models they have right now is the rich getting richer and the poor getting poor and they wouldn't want to do it the way you're, you're suggesting and AI is going to do what AI is going to do. What are you going to do if people are unemployed? What are you going to do if people don't have job? What are you going to do if people are not growing, becoming success? Then, then what do you do? Then what kind of chaos are these billionaires dealing with?
- [55:57]
C
Well, yes. Now do you realize that what we're talking about here with the, you know, replacing these big company jobs, that's entirely unsurprising, I would say, because we know there's, you know, there's overemployment in these big companies.
- [56:11]
B
Sure.
- [56:12]
C
But you know, what is, what is the percentage of companies that are listed even on any stock exchange? It's 0.01% for sure. 99.9% of companies are small and medium sized companies that are not listed and are likely never to be listed. And also that's where the majority of employment is and that's where we have underemployment because the small firms are always liquidity rationed. They usually can't get enough money because they don't have access to capital markets. It's mainly banks that lend to them and the number of banks going down. So we have increasing the credit crunch affecting small firms and that's much more important. So you can easily counterbalance the big companies always go through these phases of okay, we're going to cut and McKinsey comes in and they cut 10%. That's what they always do. But that's marginal compared to if you increase employment in small firms. And all you need to do there is create more banks, not reduce the number of small banks, but create more small banks.
- [57:13]
B
I'm totally with you. I don't think what I'm saying is not against the solution. I'm not against and I know the numbers because when I go back right now, 46%, 45% of Americans work for small business. Okay, it's well, but in this could
- [57:27]
C
even say it's more than that, depending on the definition.
- [57:30]
B
But sure, let's just say the definition this is using by U.S. bureau of Labor Statistics is 45%. Small Business Today of all employees work for small business. Everybody here works for a small business. 50 years ago was 60%. 70 years ago was 65%. Okay, so what is it doing? The bigger companies are employing more, the smaller ones are being picked up or whatever, they're going out of business. Right. My argument isn't your solution is a bad solution. My argument is why would the people in power and the billionaires not want that? Why would they not want others to create small businesses?
- [58:03]
C
The answer is what Luke earlier said. It's about power and control.
- [58:07]
B
Barrier to entry to have more control,
- [58:09]
A
to not allow somebody else to maximize profits.
- [58:11]
C
And essentially these billionaires, they love the central planning because they think they can be the central planners. It's about power. They want to control things, which is actually betrayal of the American dream of individual freedom. And, you know.
- [58:27]
A
Yeah, I mean, and this AI think to your point, if you're shrinking the small, the banks while you're doing this, because I agree with you, Patrick, which is there's an order of operations. I agree with what Andreessen's saying. And I found that a lot of the, the sort of tech billionaire class like Andreessen, they are brilliant. And they also, I think they're a bit disconnected from the reality of how this has gone. I live in Cleveland, I live in the US Rust belt. I saw for me, my working mental model of what AI is going to do to these white collar jobs is what China did to these blue collar jobs. Which is to say a lot of what Andreessen said is exactly what the politicians and the billionaire class were saying about NAFTA and about China going into the wto. And from the time China entered the WTO In December of 01, by 08 09, the number of manufacturing jobs in the United States had dropped by almost 35%. They never came back. Right. So there's an element for sure they're
- [59:37]
B
not going to come back.
- [59:37]
A
Never come back.
- [59:38]
B
You're not going to bring.
- [59:39]
A
You're never going to bring that back. And so there's this assumption of essentially teaching old dogs new tricks. Right. And number one, it's hard to teach old dogs new tricks. You get to 50, 55 years old, it's hard to reskill their Andreessen view.
- [59:54]
B
Unless if your name is Tom Ellsworth. Because Tom Ellsworth is an exception.
- [59:57]
A
Yeah, Exception to the rule. Of course, there are always exceptions. And so.
- [60:03]
B
And he would be even offended I called him an old dog. Just joke with us, please.
- [60:08]
A
The challenge is this order of operations. The point you made Patrick, which is these people took on mortgage loans, they took on car loans. Student loans are less of an issue because they're owed to the government. They can be forgiven in extremists they probably wouldn't be. But that's a separate discussion. But basically our entire credit based system is not prepared for a deflationary impulse. A productivity driver. The magnitude of AI in 38 of 50 US states, the new York Times reported last year the single biggest employer in the United states is healthcare. 35 years ago it was manufacturing. It's healthcare now. And these aren't doctors and nurses, these are healthcare Point. Healthcare administrators are one of the biggest jobs. So AI is uniquely suited to disintermedia to driving high unemployment among health care administrators. These are good paying jobs. These are people that have never had to think about what the blue collar guy has, which is wow, my job might go to China up until two, three years ago. A healthcare administrator salary on that health
- [61:09]
B
care administrator Rob, what is that? Give me a high low of a healthcare administrator salary.
- [61:15]
A
I bet you it's 80 to 120.
- [61:17]
B
Let's say it's not a bad number. You're pretty spot on.
- [61:20]
A
94 to 120 by the way.
- [61:22]
B
And the top earners make 150 to 200. So you could make it up to a. Okay, so you're saying AI is going
- [61:29]
A
to replace these guys, these types of jobs, it's very easy to do. And again if you have the there's no social safety net big enough, they're going to fall into default on their mortgage loans. Possibly. There's certainly. And you can already see that delinquencies and defaults on consumer loans are at the highest levels already since 2011, 2012, shortly after the great financial crisis. So if you have some sort of institutionalized system like what Richard's talking about, of small banks that are looking to take risks to support entrepreneurs as they go from this to something new, empowered by what Andreessen highlights is absolutely the productivity enhancing power of AI, then this can work. It's going to be tenuous, but it could conceivably work. But as it's structured now, what's going to happen is you're going to see increasing unemployment amongst high earning classes that took on loans, never thinking that their job would be threatened. In a way, a blue collar guy's job was threatened by China and they're going to default on their house and on their car and then the banks are going to have to constrict credit because they're taking credit losses due to the regulatory ratios that Richard talked about. And we're going to have another. Some. Something that looks like gfc. And you're starting, in my opinion, to see cracks already when you see these. Private credit.
- [62:46]
B
Global financial crisis.
- [62:47]
A
Global financial crisis.
- [62:48]
E
Oh, wait, so look at, so what do we, what, what percentage of jobs are those? Like you know, the entry clerks, the customer service, the call center. What percentage of American jobs are. Are we talking about that AI could take?
- [63:01]
B
Oh, this, just this health care administrator. I'm glad you asked. I just looked it up right now. How many people have that job? 560,000 healthcare administrators in America.
- [63:10]
A
That's one, that's one for all the all jobs. So. Well, Andre Karpathy, who's a AI expert, did a study using the 342 Bureau of Labor Statistics job classifications. And it was a heat map. You can probably find it online. The heat map of risk to AI. Okay. And he rated them from low risk to very high risk. And the low risk were exactly where you would think. It's construction workers, laborers. It's such things that in the real meat space, there it is, there's the heat map, okay. You can see the very high risk, very high risk. There are 25 million jobs at very high risk of disintermediation. And another, I believe 34 million jobs at just high risk. So you're talking about 60 million jobs. What's the labor force? 120 million, 150 million in the United States, Something like that. You're talking about 30 to 40 jobs. 30 to 40% of the jobs at. At risk. And look at all these jobs here, right? That you can scroll over to the right on this thing. It's what I do for a living, right. I'm in financial markets.
- [64:16]
E
And think about this. And I love that you brought that up because that kind of economic desperation, once those people, if they're not trying to recreate or an AI takes over. AI takes over. You're talking about a serious civil unrest where they haven't gotten ready. There's no other jobs. That's like civil war type. Hey, we're hungry. I can't feed my kids.
- [64:36]
B
Oh, if this.
- [64:36]
E
Oh my God.
- [64:37]
B
By the way, here's the thing though. Let me, let me tell you, you know, the whole Rich gets richer, poor get poor.
- [64:41]
E
Yeah.
- [64:42]
B
A part of it is on the poor. A part of it is on the rich. Let me explain my opinion, okay? And I get, I get hateful. I used to be the poor guy, okay. My dad was a cashier at a 99 cent store.
- [64:52]
E
Doesn't get worse.
- [64:53]
B
My mother ran out of money, went back to Iran and I would go and he'd be making sandwiches and we're broke. He's making $1,500 a month. My dad, okay, working at a cashier. Out of 99, I joined the military.
- [65:05]
A
Why?
- [65:05]
B
I have no money. My credit score, 484. 495. 499. Now ask me the way I lived. Anything I made went straight to the nightclubs. Anything I did, it was all about sports, party and travel and hanging out. No investments. Could care less about mutual funds. I'm not getting paid. All of a sudden it's like boom. I read a book called the Millionaire Next Door. The millionaire next door drives a Ford F150. You know what he talks about in that book that the millionaires, the number one car millionaires drive in this book, it says F150. It's not the Ferrari, it's not the Lambo, and it's not any of that stuff this guy uses. Dollar cost averaging puts the money away long term. It grows from at 11, 12. Stay in the market S and P because that's the way for you to hedge your money against all these other guys. If you really want to compete against the other guys, they're in the market and half the time they can't beat the S P anyways. So if the last 40 years SMP is down 11 and a half percent, guess what? If you don't know a lot about it, go buy a nice little mutual fund. American Funds Investment company act. Go to Vanguard, go to somebody that's get an ETF to play it safe, right? And then, you know, expenses, you know, find a way to save 20% if you can. 10% live way below your means. This is on the individual. Learn a new skill set. Go learn Claude. Go learn coding. Go learn the skill set today. So if the poor is not doing that, that's on them. Those who do to get out of it. Different story now. Let's go to the rich. A part of this being on the rich. If you're building a company, Richard, and this is what I thought about. I was in a company that I went and had a meeting with them at Duluth, Georgia and I said one day I would like to be the CEO of this company. I want to know what I can do to own a real piece of this company. Because I want to give 20 years to this company. They laughed me out of the room. I was 29 years old, 30 years old. Who the hell are you? I said, oh, really? Yeah, this lady named Susan. So I walked in, I'm like, very interesting how they handle this. Okay? They say, you'll never leave. You're not going to start a company. You just come in here to get a few million dollars because another guy does this every four years and you're trying to scare us. You have a very good life. You're not going anywhere. I'm like, wow, how many other people came and they were faking it? And then I said, I'll never do that. So I left. I started an insurance company. I gave everybody who were leaders equity. And what happened when everybody got equity? We didn't lose people. They stuck around, their lives changed. Happy marriage, they had kids. Players that spend the most time with me. They got on average three to five kids. Because to me, it's like, I want you to have a happy marriage, have a lot of kids, have your dreams become a reality. You know, enjoy your life, wear nice clothes, eat good food. You're good to go. If you don't think that way, people are leaving you and your company collapses. So I can't see the logic of not creating an economy where young people want to get married, want to have kids, want to have their dreams, dreams become reality. Want to live in a nice place. If you don't have that kind of an environment where everyone's having a dual career, you know, husband's working, wife's working, this is not a good climate for the economy. And that's kind of where we're going today. So to me, it's more coming from that standpoint. I want to come to you and ask you as a question. This is Jerome Powell yesterday. I don't know if you saw this or not. So this is your space. So Jerome Powell yesterday is talking about the 39 trillion dollar national debt that nobody wants to talk about. He just flat out comes out and says the following. Go ahead, Rob.
- [68:14]
A
Sometimes you just want a good story.
- [68:16]
C
On TikTok, you'll find short dramas, emotional,
- [68:20]
A
fast, and impossible to stop watching. Download TikTok. Now,
- [68:29]
G
What's clear is that our debt is growing much faster. The federal government debt is growing substantially faster than our economy. And that ratio is going up. And you know, in the long run, that's kind of the definition of unsustainable. The level of the debt is not unsustainable, but the path is not sustainable. And so it's, it's really Important that we get back to, we don't have to pay the debt down. We just need to have, you know, primary balance and begin to have the economy actually growing better, growing more quickly than the economy. I mean it will, it will not end well if we don't do something fairly soon. This is not the Fed's job, of course and I pretty much limit myself to those high level points which, which essentially everyone ignores.
- [69:18]
B
Now he says this, he says this is not the Fed's job. Right. And yeah, he continues to say a few other things. There's a few clips, I'll just play that one. And then a story comes out talking about Americans carry 1.79 million in lifetime debt as US total hits $18.4 trillion. How sustainable is that?
- [69:40]
C
He says it, he admits it, it's unsustainable. The path is unstable. He sort of is technically correct by saying the actual number itself, 39 trillion total national debt. That's not the problem as such, which we can agree because otherwise we'd have a huge stock market collapse today, you know, a real meltdown. So but he's, but he's also correct to say that the path is clearly unstable because you know, it's now the time it takes for another trillion to be added is constantly shrinking. It used to be a decade, then it used to be a few years, now it's a few months and it will be a few weeks and then it will be a few days. You know, we're not far from that. So, and that is unsustainable. And he does say the most elegant solution, I mean there's other solutions and they're far less elegant. The most elegant solution is to have higher economic growth. He even says that. But then he says, and you picked up on that, that's not the Fed's job. And that is so wrong because the Fed is also one of the bank regulators. And economic growth is directly proportional to the number of banks. And it's not rocket science. If we had another 5,000 small banks, we could easily double economic growth, if not more.
- [70:56]
B
I love that you keep talking about that. I love that you keep going back to the basic fundamentals.
- [71:00]
C
There's the Fed chairman saying, well that's not our job actually. They've reduced the number of banks. Monetary policy itself, regulatory policy has reduced the number of banks. And they've done everything to reduce numbers. Somehow they think that's great thing to reduce number of banks, concentrate the banking system, increase the power of the central planners. But the result is less economic growth. Apart from any other consequences. Less freedom and small firms, credit crunch and, and, and less job creation, unequal economy. And yet he claims. Oh, that's, that's not my job. It is. You are actually responsible for this.
- [71:35]
A
I was going to say is this. It also ties into your point about before. Of the three types of lending product, you know, productive business lending and then other other unproductive types of lending. And what he doesn't say in there, but what he should, is the most unproductive way you can spend lending is on war. You borrow money, you build a missile, a bomb, whatever, you drop it. Once it goes boom, it's gone entirely.
- [71:59]
C
Agreed.
- [72:00]
A
And the debt is still there. And so when you spend $10 trillion, $8 to $10 trillion and the Iraq.
- [72:04]
C
Absolutely.
- [72:06]
A
And the forever wars and the global war on terror, number one, that's a big part of why this is becoming unsustainable.
- [72:11]
C
Exactly.
- [72:12]
A
Then to your point as well, about this isn't a problem now, but it's becoming one. I want to go back to what I said earlier about the net international investment position and our part, this Iran war, the part that nobody's talking about yet, the second derivative of what we have just done, which is we have choked off energy to the people who own our bonds. They are going to sell our bonds to buy energy and food. And so while what Powell is saying is nominally true today, de facto our debt is sustainable. The number one factor, as we've seen over the last four or five years, as interest rates rose at the fastest pace in 40 years, the number one factor of maintaining the sustainability of our debt that high is the interest rate we pay on it. And this war just is guaranteed. It's going to guarantee our foreign creditors. It's not do they want to buy bonds? Do they not want, they have to buy bonds, they have to sell bonds to buy energy and buy food. It is a guarantee. And so our interest rates are going to go up. They've gone from when we started this war. The 10 year treasury yield was 3.94%. Today it's 4.4%. And three times last week.
- [73:20]
B
In four weeks.
- [73:21]
A
In four weeks and three times last week it hit 4.4%. And Trump tacoed. Bibi Taco'd. Trump Taco'd. They did everything they could to keep it below 4.4. Well, you're gonna wake up. If this war continues as it is and Hormuz stays closed, we're going to wake up and there's going to be a week or two weeks where the 10 year treasury goes from 4.4.
- [73:41]
B
Yeah.
- [73:42]
A
To 5.5%.
- [73:43]
B
Well look, I'm glad your specialty is delivering good news to people. I want to applaud you.
- [73:50]
C
Go ahead, Patrick. And so what's going to happen at that point will the Fed will step
- [73:55]
A
up, they're going to print money into an oil spike.
- [73:57]
E
Oh, you got.
- [73:58]
B
Are we going back and forth its
- [74:00]
C
version of QE now?
- [74:01]
B
Are you joking?
- [74:02]
A
What's going to happen here because of this war?
- [74:04]
C
In how long can we have that clip where Jerome Powell talks about QE to Harvard students? I think you've got it. One of those sheet here in the back.
- [74:13]
A
He talks about it here. Right here.
- [74:15]
B
Go for it.
- [74:16]
C
Yes, indeed.
- [74:16]
G
The other side of it is, you know, QE is thought by the critics to, to risk all kinds of other things. So for example, you could buy too much of the treasury market and it would stop functioning. Well, we have not seen that here at the very beginning, beginning there was the thought that it would be inflationary. We have not seen that. Or that it would, that it would threaten financial stability or even create inequality. So we haven't really seen the downside risks.
- [74:44]
C
So sadly what he's saying is wrong.
- [74:49]
A
We didn't do it. Wasn't me.
- [74:51]
E
That's right.
- [74:51]
A
It was like Shaggy.
- [74:52]
B
Wasn't me.
- [74:52]
C
Now basically it's a sleight of hand. I mean, and this has been done by a lot of commentators who missed the difference between QE 2008 and the QE 2020. It's like night and day. This was very different. In fact, These are the two types of QE I recommended originally in Japan in 1995 for this deflationary crisis banking system bus, credit creation, shrinking credit crunch. And then the solution was my QE1 proposal. The central bank buys the non performing assets from the banks at face value. The banking balance sheets are cleaned up, no cost to the taxpayer, no national debt increase, no tax money used. Elegant solution can be done. Has been done when they want a banking crisis not to affect the economy. But of course often they do want. That's QE1 and that was done in 2008 only by the Fed. The other central banks did this fake QE that the bank of Japan did where they just buy bonds from banks and it doesn't really help. But the Fed did this QE1 in 2008 and that doesn't lead to inflation because there's no money creation, there's no injection of new money into the non bank sector. It's just within the Banking sector cleanup between the central bank of the banks. And so they then extrapolate, everyone extrapolate, okay, 2020. Yeah, they're doing the same thing. So no inflation. And he's like, well, we know of course there was inflation 18 months later, as I warned there'd be significant inflation. And sure enough, 18 months later, essentially double digit inflation. And not just in the US but also in European countries. Now why is that? The difference is this QE2, I recommend it in Japan.
- [76:26]
B
How soon do you think this is going to happen? I want you to say the Japan story in a minute. But how soon you think QV is going to have if this, you said second week of April, if it goes past April 15th and nothing's really moving and Hormuz hasn't opened up, say it's the same way that it is. How much longer until they go to quantitative easing.
- [76:43]
C
And also the question is which type? The non inflationary one. It looks like they will have to do or they would want to do. I mean they don't have to correct myself there. It looks like they will be tempted to do the QE2 type which will lead to inflation 12 to 18 months later. Sadly, I think this is what's going to happen. And I always had the feeling that they're just going to repeat the script of the 70s where we had two bouts of inflation with a few years in between. That's where we are. You know, this is essentially and for the same reason, because the 70s was about switching from the gold link dollar to the petrodollar and the inflation was actually not created by the oil price shock. It couldn't be because it became fake though.
- [77:26]
B
We became a fake market.
- [77:28]
C
Well, yes, but you see, the inflation was in 73 already, but the oil price only quadrupled in January 74. So how is that going to create the inflation? It's because the Fed, as soon as Nixon had his announcement in 71, the Fed switched on the printing press and told the banks to massively create money for asset purchases, real estate lending and so on. And so bank credit ballooned 20, 30% credit growth in 71 and 72. That's created the inflation of 73. You see. So when you rearrange the monetary system, now they want to switch from the petrodollar to the digital dollar, whether it's through stablecoins or in Europe, more likely central bank digital control, cbdc. Well, they say currency, it's a control system. And so really that's the background. So the second type of QE which was what they did in 2020, totally unnecessarily. And it was absolutely not called for, it was not needed, it was predictable, would cause inflation. I propose that in order to kickstart bank credit, central banks can force banks to create money by the central banks doing what they rarely do, deal with non banks and buy assets from non banks. I proposed at the time in Japan 95, 96 that they buy real estate. Central bank buys real estate and turns into parks because in Tokyo there's not enough parks. It's not a very green city.
- [79:00]
B
But they buy shit companies, but they buy shit loans from them to help them out. That's what they do. It's fake.
- [79:06]
C
So in principle it doesn't matter what
- [79:07]
B
they buy, but that's what they do.
- [79:08]
C
It's because when the central bank deals with non banks and buys something, this forces the banks to create that money out.
- [79:13]
B
But that money rarely ends up to the person.
- [79:15]
C
Well of course, of course. And so, but, but when you have deflation.
- [79:19]
B
Yeah.
- [79:19]
C
And shrinking credit creation and the asset markets are collapsing, then that's, you know what. But that wasn't the case in 2020. So they totally wrongly did this and it led to this predictable inflation. It was small spend, consumer spending. And so that was the problem. But they knew that they wanted it because BlackRock had written up my proposal, QE2 as their proposal. Elga Bartch, who's a fellow German, had seen my work. They presented it at the Jackson Hole conference, August 2019. The BlackRock plan going direct, they called it. Well, QE2. And the interesting is they say, well when the next crisis comes, we need to create inflation. They never explained why do we need inflation. And then in March 2020, the Fed did it. It adopted the BlackRock plan. How do we know that? Look on the website. Fed hires BlackRock to do what they said, which is purchase assets from non banks. Of course the Fed didn't want to deal with all these non banks. In other words, these were corporate bonds as you mentioned, issued by companies. The Fed buys them, forcing the banks that the sellers give as their bank, you know, please put the money here to create these new deposits. That's how you force an expansion in the money supply. And the inflation followed because of course the economy was ready. Well, 5%.
- [80:42]
B
Richard, you don't live in America, you live in Hungary and Switzerland. Right? I think you said Hungary and Switzerland. And you're always welcome to move to Miami. We would do a podcast more often if you're down here because it would be A drive to you as well, instead of Cleveland. And we tend to have, have better sports teams than Cleveland, although our sports teams aren't doing too well. But I would tell you this, I would tell you this is, you know, this is my concern. If they do quantitative easing, the second type inflation is going to be delayed 12 to 18 months.
- [81:15]
C
Yes.
- [81:17]
B
Affordability doesn't change. And so this pro capitalism people are becoming rich billionaires. Elon becomes a trillionaire. It easily sets up for an AOC type to be president in 2028. And I know it's the last thing people think about. It's like, give me a break, aoc. Nobody thought a socialist Muslim was going to be a mayor of New York City. But if they go this hard, like when you're going this hard, you get this hard, right? You get this person of a reaction. But if we're going this hard, you don't get this hard, you go, bam. So if they continue to go this way, and I'm looking at it for Homeownership Costs consume nearly 100% of typical wages in some parts of us. What do you mean 100%? If you go to page 15. Okay. Affordability pressures are most acute in coastal markets like California and New York, where in some counties the most homeownership now exceeds or nearly consumes a full year of typical wages. Kings County, New York topped the list of the least affordable market where homes cost 109% of typical wages. Okay, Vinny, you know what that means?
- [82:22]
E
What?
- [82:22]
B
You make 100 grand a year. Your home to buy, average home to buy, you need $110,000 just to pay for the home. 108.9, 108.6. Santa Cruz, 97%. Marine County, 91%. San Luis Obispo, beautiful place. 89.7 OC, 88%. And then the next store. Nearly one in three car buyers are underwater right now on trade ins. These are not good things to be looking at. This is affecting middle income. This is the most important community we have in the country. How do you react to it? If we go what he's talking about, if in the next, after April 15, they do quantitative easing, oh, we're just going to bail ourselves out. And here's what we're going to do. We're going to get the money from ourselves. Inflation goes at 12 to 18%. Families are sitting there saying, how the hell do I buy a house? How do I do buy a car? How do I pay off my debt? How do I do this? You're going to get the complete opposite reaction because an AOC is going to come out and say we told you to reach this, we told you to rich dad. All they want to do is build themselves. Look at all this bitcoin. Look at the money they're making in crypto. And who takes the hit? You? We are going to change it and then people are going to say maybe we have to change the ways. Thoughts?
- [83:24]
A
Yeah, I think it's sadly, I think it's exactly right. It's a big part of why I was very vocal. Why for me, the Iran war is not about the politics of it per se. That's a separate discussion. And people have seen my comments on said. Oh, you, you're anti Trump or you have td. No, no, not at all. What I'm looking at is exactly what you're describing, which is I look at what Powell says about the sustainability of the debt, I look at the energy cutoff of what is happening to everyone that owns our debt. I look at a 50 basis point rise in 10 year treasury yields in four weeks and I know it's going to go higher. It is a double entry bookkeeping mathematical certainty. I would bet my house on it. And I also know it's very simple. You can do the math. $39 trillion. Once the 10 year treasury yield gets to 4.6, 4.8% there isn't going to be a choice about having to do qe. It is going to have to happen because the alternative is we will go into a debt death spiral and take the rest of the world with us. And so for me, this Iran war was, I can't believe they made this big a mistake not understanding. These people say, well, there's massive catastrophic existential issues. No, no, you just triggered an existential issue. Like there might have been existential issues with Iran, nuclear proliferation, blah blah, blah, blah, blah. Maybe there was, maybe there wasn't. I can guarantee you by what we just did four weeks ago and have continued to do, particularly if Hormuz stays closed for another few weeks, you have triggered an existential issue that is going to be met with QE to cap bond yields so that the debt says nominally sustainable for the federal government here and elsewhere around the world. You know, Europe, Japan is another big one. And then 12 to 18 months after that you are going to get inflation that in all likelihood makes what we saw in, in 2020, 2021, 2022 look tame. I would not be surprised to see 10 to 20% inflation in the United States in 12 to 18 months. And then you're going to get into what you just said, Patrick, which is you're going to get someone who looks like Mamdani, broadly speaking. And ironically, we will get regime change as a result of the Iran war. Regime change in the United States. That's exactly right.
- [85:43]
B
Wow. You know what? I don't know, Luke. I've been talking. How long have I been talking about AOC? 2020, the last. How many months, Rob? How long would you say I've been saying aoc?
- [85:53]
E
I remember the meeting and you were doing the. You told us about the whole. What they're doing right now. Can I ask, Luke, just Luke, really, really quick, because Pat asked earlier, what would you both YouTube. What would you advise the President right now to do like. And you guys, I think we've all agreed. Go back. We would go back and tell him, is it too late that I think we're at a point right now? There is no, hey, go back to the basics. We are way too far in. What would you. Would you what? What can we do now? You can't. We can't stop. The military is not going to just go, oh, okay, we're done. Because it seems like these people aren't stopping. And I think President said if they don't listen, which the odds are, they're not going to listen. They're very proud people. He's from there, My mom is there. Our whole family's from there. We're obviously Christians. But he's talking about bombing oil if they don't adhere to the demands oil desalination grid and everything, which is going to destroy that whole place for the people. Is there any fixing it from this point, do you think? What do you have?
- [86:49]
A
We have a very narrow window here. I've been saying since this started, A, it's going to last longer than people think. Remember originally, people consensus was like, this
- [86:56]
B
is going to three to four weeks.
- [86:57]
A
Three. Yeah, it's going to be last longer. But B, I've been saying mid April's kind of been my bogey where if Hormuz is closed through mid April, then you start. It starts to become irrecoverable in terms of the downstream supply chain disruptions leading to debt defaults, leading to finance. And that's like smoking in a nitroglycerin plant, right? It's not like once you drop your cigarette and it starts going boom. It's not like you can say, ooh, let me stop out my cigarette and I'll go home. We've got probably two to three weeks, maybe Four, at the long end of how long Hormuz can stay closed before the nitroglycerin plant of all of these downstream effects starts to go. And so if it's me. And to your point, the challenge is, will Trump's ego allow him to put his signature on what will come to be known as a US Suez crisis moment with Britain in 1956, where. I don't think it will. And when you talk to military people, private contractors on the ground, I had a conversation with a friend, and he mentioned that we've evacuated most people from east of Cairo up to Jordan to Adana, Turkey, through the Gulf Peninsula. This was two, three weeks ago. I said, wait, why are we doing that? We're winning. We have air supremacy, we have dominant. He goes, are you not being told how badly our bases are getting hit? No, they're not saying that at all. Now. It's kind of been leaked out a little bit since. I mean, I hear Fifth Fleet at Bahrain is. I mean, the New York Times finally reported last week, borderline uninhabitable. Now, can you put tents there? Sure. But you can't get air defense there because they have. They have missile dominance, and they have missile dominance relative to how many missiles we can make. And the Chinese make key components for our missiles, and we're saying we want to choke off China's oil. So how eager do you think China is going to be to supply us with the components to make more missiles so the Iranians can fire more missiles than we can make for longer? Which means we're never going to be able to get back to these bases to rebuild them until we have the air defense, which we can't build without China, who doesn't want it. So you can see very quickly, we're in a.
- [89:09]
E
It's, it's.
- [89:09]
A
We're walking. It's a quagmire. We are walking right up to.
- [89:13]
B
Did you vote for Trump in 24?
- [89:15]
A
I did.
- [89:15]
B
You did?
- [89:16]
A
I did.
- [89:16]
B
Okay, so that's very important, because to say you're criticizing, yet you did.
- [89:22]
A
I voted. I voted for the man. I voted for the man. So.
- [89:24]
B
So to me, if he leaves now, Trump's going to find a way to say, hey, we did our part, we're out the rest. I think the right way to do it, to even say, I actually think this phrase could help. We came, we supported our partner, Israel needed help. We did our part. We're leaving it up to Israel. Israel has the right to defend itself. Israel has the right to do what they want to Do. And our support is from here, and we have walked out. I think that comment can actually get everybody to say, okay, all right, cool. Fair.
- [90:01]
C
Okay.
- [90:02]
B
And, you know, you get out in two or three weeks and then open up some of the relationships, broker some oil deals, get it kind of going. You're still gonna take a hit in midterm. But what can he do? Because, you know, the market cycle with news cycle, we move on very quickly. Right. What can he do in your eyes for the market to move on with this Iran war?
- [90:22]
C
I think what you mentioned is a good proposal. It is viable. It is understandable. He could potentially go a step further even to explain how all these things happened, how, you know, the deep state put pressure on him. I think people would love that and would back him potentially again, because, you know, we're all wondering, how did this happen? But it may not be necessary.
- [90:46]
B
Story just came out right now that Trump's about to fire Tulsi. Just so you know, the story is going out right now that Trump could fire Tulsi. And yeah, they're right there. Fuman Trump secretly plots firing the top goon for embarrass, embarrassing him. I don't know what story you went to, Rob. You went straight to Daily Beast. Go back. The first one right there. The Guardian. Yeah. Trump polled advisors, top goon. Trump polled advisors about replacing Tulsi Gabbard as intelligence chief. So this could be the part where, look who's giving me the intel. Where's the intel coming from? I was told this is gonna last a week, two weeks. I was told. So if he kind of. You guys saw. Even the other day, he kind of joked about Caroline Levitt. Did you hear what he said?
- [91:32]
E
A couple.
- [91:32]
B
Should we fire her? Should we still have a job? You guys didn't hear this?
- [91:34]
A
No.
- [91:35]
B
Rob, do you have this where he says, I don't know. Do you guys think she's doing a good job? Do you guys not think she's done? Do we need a new person? I think she's doing a good job. I think she's pretty safe. Is this it?
- [91:43]
A
She's in a tough spot.
- [91:44]
B
You're doing a terrible job. Is this it, Rob, plate.
- [91:47]
D
93% bad publicity. Some people say 97, but between 93 and 97, a person that gets 97% of bad stories. Maybe Caroline's doing a poor job. I don't know. She's my representative. You're doing a terrible job. Should we keep her? I think we'll keep her, but I get 93 to 97% bad press, fake press, all fake. I won in a landslide. When you get 93 to 97, bad stories, bad press, and you win in a landslide, you know what that says? People don't believe the press.
- [92:23]
C
I got 90, by the way.
- [92:25]
E
She's not, not to cut you off. She's not the only one. He said yesterday, Rob, I just sent it to you right now, too. Pam Bondi's also, he's discussing together. So he's, he's trying to, you know.
- [92:34]
B
But you know what, though? That's what you need to do. Honestly, that's what you need to do sometimes, because if you're restructuring, you have to show we had to make some changes. And here's what we did.
- [92:44]
C
The other thing he could do because of course, another theme has been his relationship with Europe, with NATO, you know, dissatisfied this and that. And I think it's important to change things in that relationship. That would really change the dynamics. Also, you know, with a view of how do international investors see this, European, even Japanese investors, how they see America. He's been treating Europe as if they're sovereign nations. And the reality is they're not. They're run by the CIA and his opponent. So essentially he's been fighting with the CIA when he fought with Europe, and, oh, they're not supporting me. Well, it's because the CIA or that branch of the CIA, let's say, you know, based there, has been using Europe to manipulate and maneuver against Trump and against his original policies. So in order to treat Europe as partners, what he needs to do is set Europe free from the deep state. So we need a bit more of this early plan of fighting the deep state by coming out and saying, okay, actually Germany's not sovereign, but it's about time we change that. Germany should become a sovereign state. We're going to have a peace treaty. We're going to ask the Germans to actually free the, you know, we're going to withdraw occupation troops, we're going to position them somewhere else, and we're going to allow Germany to have a constitution again, be a sovereign nation. We're going to change the UN Charter. It's not going to be an enemy country in the UN Charter again. And Germany has, will have to do some serious changes because the entire period since 1945, you know, the government structure, the parties have been entirely arranged as occupation administrators. And that resulted in all sorts of contradictions and problems, including when somebody comes to power in America who wants to fight the deep state, then he's got, you know, this CIA power base in Europe and there's Brussels as well fighting against him. And so that needs to be changed. And of course Brussels, the other thing, because that was another CIA project that needs to be ended. And Europeans would love him for that. In fact, the whole world would love him for that. Why do we have these dictators in Brussels that have this power of sanctioning people? That means your money doesn't work anymore. You can't buy food. You know, there's a Swiss, a former actually Secret service high ranking official who's now retired, lives in Belgium and did some analysis on Ukraine, Russia, war, just his opinion and that was enough to be sanctioned. He can't travel, he can't buy anything. And they're doing it to journalists as well. Now in Germany. This is the European Commission. There's no court proceedings, it's just sanctioning people, of course, giving us an insight in what they're going to do. When we have central bank, digital currencies, it's quite useful. So this Brussels, Soviet revival system that needs to be addressed. And Trump is the right guy, you know, if he wants, you know, why is he even talking to a Soviet Union style structure?
- [95:52]
B
Well, let me, let me read this to you and I'm going to come to you, Luke. China, Russia cooperation hands the US a grievous loss as Iran conflict escalates. Expert warns. Rob, I think you got a clip on this because this is causing some people to get close to each other. This is Gordon Chan, we've had him on the show before. Go ahead, Rob.
- [96:09]
A
Gordon, anything else strike you about China's
- [96:12]
C
relationship with Iran and how it's undermining the United States?
- [96:15]
A
States and all of us want to
- [96:16]
B
come to you with this one first.
- [96:17]
C
We just lost an AWACS plane in Saudi Arabia and the Russians and the Chinese almost certainly supplied the information to Iran for targeting purposes. That was a grievous loss for us. There's got to be some costs on China for continuing its support of Iran.
- [96:37]
A
Yeah, and that was an early warning jet which gives early warnings to, you know, intelligence to, to the region's officials and, and troops on the ground. And the Wall Street Journal reported that a replacement of that jet will cost $700 million. That was a real loss, you're right. And you're saying the reason that they knew where that jet was is because China provided the information.
- [97:03]
C
Yes, from even before this war started. You had a private Chinese company, Maservision, showing the location of US Military assets in the region along with specific coordinates and then we have that large Chinese intelligence ship just off Iranian waters. You know, China's support for Iran is almost across the board. The only thing they don't do is they don't supply combat troops. But apart from that, China is there, and we need to recognize that, because if we don't recognize.
- [97:32]
A
Yeah. So I just really quick, just to follow up on your point, then I'll. I'll touch on that point. Which is the best explanation I've seen for why Trump did this, seemingly so out of character, is from. We'll call him a friend of mine in sort of the Washington world.
- [97:51]
B
It's a mobster, a friend of mine.
- [97:52]
E
Like, is he connected hours?
- [97:54]
B
Like, just tell us, because.
- [97:55]
A
Yeah, well, he said, how do you get. If you have a dog that won't stop chasing cars, how do you get them to stop? And the answer is you let him catch the car, who's the dog? Right. The neocons have wanted this war with Iran. The deep state have wanted this war with Iran forever. Let them catch the car and then let it go badly. I'm not saying I like what that means, but let the American public see it, let them feel it. And so there's a way where this goes, where maybe he stands aside and he lets gas go to six bucks and he lets basically Iran and Israel beat each other to death. And I would prefer that that's not a bad. Like, that's not a bad outcome.
- [98:33]
B
You know what it is for me, it's like, okay, guys, go, go. Because he can't tell his Western hemisphere.
- [98:39]
A
Yeah. He can't tell Israel to go. Practically speaking politically, he can't say, I'm gonna let Israel go, so let them have their fight. And then just. That might be what we're watching. But so to Gordon Chang's point, absolutely. Russia and China are supporting them. And what Americans have not been well informed on, because, you know, that's just not what politically. But in the 23 and 24, we have been, since then, been providing very accurate targeting information, doing everything for the Ukrainians, but pressing the red button to hit Russian targets in Ukraine and even in Russia, in Russian territory proper. More importantly, they were launching missiles into Russia with our targeting and guidance. And the Russians didn't take the bait. They said, we will retaliate at a time and place of our choosing. And what I hear is that the time and place of their choosing was about two, three days after this war began. Because the Iranians apparently only have, like, two satellites. We were not expecting them to be Very accurate. The Russians have a satellite system called glonass, GLO NASS that is apparently extremely accurate. And then the Chinese also have private, basically gps, et cetera. And yeah, they're absolutely helping. I think we've lost two, at least one, if not two, E3 AWACs. Those are, would be the first ever loss of that aircraft in combat. If I hear right, we have lost, if you include the 16 as I saw it yesterday, Raptor drones as fixed wing aircraft, we have now lost as many, either just 95% or more of the number of aircraft. Fixed wing aircraft we lost in 11 years in Iraq, we have lost in four weeks in Iran. And why is that happening? Because they are getting good targeting from the Russians and the Chinese. And so there's this narrative, the Iranians are on their own, they're beaten to death. The Russians are weak. The Chinese are weak because they're not helping Chinese by culture. They aren't going to come like an American and punch you right back in the face. They are going to sit back passively, aggressively respond in a way that works for them. The Russians, a little bit of the same dynamic. But the point here is this. The American people are not being told that they are fighting Russia and China by proxy in this war. And that is exactly what's happening. And when we look at the implications of that, number one, do we want to be at war with Russia and China? Probably not. But number two, they have the two biggest industrial bases in the world. The Secretary General of NATO in January 2025, Secretary Rudy came out, Mark Rudy came out in January 2025 and said in the Ukraine war, Russia has out produced all of NATO, America and everybody else 4 to 1. Not on a relative basis, 4 to 1. So the Russians can outproduce our industrial base and have been. They are supporting Iran. The Chinese, our military literally cannot go to war without Chinese factory bases. There's a great study by Govini, a government Washington contractor consultant, and they have put out a couple of excellent reports looking at how deeply embedded the Chinese industrial base into our components. The head of Raytheon in 2023 CEO said we cannot go to war without China. It was an article in the Financial Times and it would take many, many years, his words, not mine, to replace that. And so think about the logistics of this. We are going to war with Iran, supported by Russia and China, both of whom can outproduce us and are. And one of whom we can't make anything without this reality of logistics is, is, is, is superior to A dominant to everything else.
- [102:19]
C
So what sense does that make?
- [102:20]
A
I mean, no sense. And because, because they know this. Right. To your point, the policymakers in the west know this. Which leads you to your conclusion, which is somebody wants this to go on.
- [102:29]
C
And of course, the risks are extremely high because we're talking about, and you know, this is, has been the, the, the downside that's not really discussed of all this. There is the risk that this will lead to World War Three.
- [102:45]
A
Yes.
- [102:45]
C
A full blown World War Three.
- [102:47]
A
Yes.
- [102:48]
C
We could see some to and fro, perhaps cooling down a bit, then heating up again in the coming weeks and months. But there is a risk because forces are clearly at work that want this
- [102:59]
A
to happen when we don't have weeks or months, right. Like we are three weeks to make three to four weeks, where it becomes irrecoverable.
- [103:06]
C
You know, and of course there's things like there could be false flags. There could be a nuclear bomb being dropped on Iran. You know, there could be escalation, there could be a false flag nuclear, maybe the other way all these things are possible. Sadly, you know, when one side feels a bit cornered or triggered by something or a false flag blame in this situation.
- [103:29]
B
We're cornered is what you're saying.
- [103:30]
A
And everybody's cornered. This is, this is, people say, well, we're just gonna stay here. And this is what the administration is telling the public. This is every bit as existential for Russia and China as it is arguably with Israel and Israel and US Can't, Israel and we, Israel and US we can't make the air defense missiles without China's rare earths. And China's already curtailing them, I hear. And so again, it gets into, then it brings you to that Israel and the US are already reportedly running low on these interceptors. You're already seeing the batting average more,
- [104:06]
B
not only low, but the cost of it, the cost of making it.
- [104:09]
A
And they can't make it. So they are now getting pounded without an ability to defend. What do they do in that scenario, to Richard's point? Do they evoke the Sampson. Invoke the Sampson option. Right. Do they drop a nuke? That's entirely. And then what? I don't know.
- [104:22]
C
And also clearly, you know, the, the US whether it's the military leadership or the Trump administration, administration per se doesn't seem to have any control over what Israel is doing.
- [104:32]
D
Not at all.
- [104:32]
A
None at all.
- [104:33]
C
And therefore, and you know, you know, they, it's known officially there's no nuclear capability, but actually there is. Everyone knows that, you know, JFK didn't want this to happen, he got killed. And of course, what is this for? There have been forces saying for years and years, we want this war against Iran. So there seem to have been some long term planning. And what are the nuclear capabilities for now, of course, you know, we're talking about Iran. Well, actually they were engaging with the international nuclear authority always. And they had, you know, inspectors coming and they had, you know, things to do. There was an agreement which then the US Side canceled. But what about Israel? You know, it's not even signed this, you know, international nuclear anti proliferation treaty and officially doesn't have any. But, but so, okay, but we know it has capabilities. There's no U.S. control, no military outside control over their decisions. So this is an extremely dangerous situation.
- [105:36]
A
And the US Policymakers have very unusually, if you've paid attention to this war. Rubio publicly said Israel led us into this. Multiple US Senators said Israel let us into this. Which is a very unusual inorganic shift of the Overton window on that discussion. You've seen Reuters report on it, you've seen Bloomberg report on it, you've seen New York Times report on it, specifically saying Israel and Netanyahu pulled the US into this.
- [106:00]
B
This is why I think Trump should just get up there and say, hey, we helped you, we kicked it off. We leave the rest to you. Go fight it. We have your back, but you got to go do your own thing. And if you want anybody for us to support, hey, you got to. I think, I think he has to. Every time he goes and kind of puts Bibi in his place in his own way, you know, the, the, the popularity goes kind of back to here.
- [106:27]
A
Yeah, that helps him.
- [106:28]
B
It helps him. So I just think he needs to take that position and I think he needs to make that clear because the audience is a little bit confused. And MAGA is not just maga, is not one type of maga. There's seven different types of voters for him. One voter was, you know, the market. One voter was the border. One vote was the war. No war. One vote was, well, one. So he's got to find a way to bring them together. But anyways, it's been a great conversation. It's probably the longest conversation Richard, we've had on typically we do hour and 15 minutes. We went to the almost two hours. Really enjoyed it. Gang, if you want to learn more about what Luke does, Rob, let's put the link below to Luke and the work he does. He's, he's got great commentary on X and also at the same time with Richard Werner. If you have any questions for Richard Werner, there was a lot covered today. Go manect him. His link's going to be below as well as his sub stack. I think both of you guys have a substack if I'm not mistaken.
- [107:19]
A
Yeah, you can. You can get our written work through the website.
- [107:22]
C
So my substack is. Is rwerner.substack.com we're going to put that below.
- [107:26]
B
We'll for sure put that below for people to go check it out. And again, the offer's still on the table. If you guys miserably choose to leave Switzerland, Hungary and come down here from Cleveland to South Florida, there could be a lot more activity for you guys if you guys come down here. Anyways, Vinnie, incredible insight. I feel, I think that I don't want to undermine.
- [107:46]
E
My brain hurts. But I learned.
- [107:48]
B
Yeah, but a lot. Faith over fear, buddy.
- [107:50]
E
100.
- [107:50]
B
Faith over fear. Hey, 51 percenters. Press that subscribe button. Come on, fully commit. Anyways, God bless everybody. We'll do home team tomorrow. Take care. Bye bye. Bye bye.
- [107:59]
G
Thank you.