📍 Hey everybody, Jonathan Doyle with you once again for the supply side podcast, it’s been great. The last few days managed to get a fair bit of content out there and seeing it gets some great take-up around the world. So if you’re listening, thank you so much. I’d love. If you could grab this episode, perhaps posted on your social media feeds, make sure you’ve subscribed. It’s a great joy to be doing this. I’m learning a great deal.

As I go, Abraham Lincoln famously said that it is better to close one’s mouth and appear to be an idiot. Then to open one’s mouth and remove any remaining doubt. I always liked that. I was like because I’m learning in this space and it’s a great privilege to interview so many great guests be reading great books.

But to position myself as somebody coming late to this space of supply side and predictive classical economics. And feeling like I’ve woken up in a dream going, how did I not realize that this a lot earlier? And speaking of, that. Reflective modality. This morning, I was on the bike. I did about a.

At about a 75 80 K kilometer training ride this morning for my American friends, I guess that’s about maybe 55, 60 miles, something like that. Give or take. And I was listening to Peter Schiff as I do. I really enjoy listening to Peter’s work and somehow the supply side God’s just happened to load up into my.

YouTube premium LA listening order. My saved playlist. Peter shifts speech to mortgage bankers on the 13th of November, 2006. Now, if you haven’t seen this or listen to it. I’m going to post the YouTube video here on the page. It’s supply side partners.com. And if you’re listening to this on the page or listening to it somewhere else, come across the supply side partners.com. And look for this episode, it’s February 11.

And I’m going to post Peters video here. It’s extraordinary. Said to my wife, Karen this morning, it just blew my mind. He’s there in 2006. And he is just, does almost perfectly delineating the global financial crisis, which wasn’t gonna happen for about another 12, 18 months. He just lays out the complete case.

And it’s a room full of mortgage brokers, right? So that’s what I like about him because he just doesn’t pull any punches. He’s not there to make anyone happy. And it’s extraordinary. He just outlines what’s going to happen with Fannie Mae, Freddie Mac, how the government’s going to prop up banks and it’s surreal.

It’s really strange to be listening to something at eight months before it happens. So I’ll get you to check that out if you can, but also. Listening to his recent stuff. And just, I guess the study I’ve been doing over the last 18 months. I think we’re in the same place. I don’t see how we can’t be. And that’s what really want to talk about in this episode. I want to share with you, but I’m not in the same place, but possibly worse. Because as I said, in yesterday’s episode, what most governments do is kick the, can down the road, right?

Debt ceilings and no collapse on my watch. It’s like a political latest, just same content to borrow, run massive fiscal deficits. And then kick that can down the road. And by the time it really blows up, there’ll be retired somewhere on an enormous pension. With a permanent security, which they’re going to need when the social fabric starts tearing in pieces.

Due to the complete absence of low taxes and stable money. Now today, quickly, I want to talk to you about a great article. By one of the best journalists, at least here in Australia, in the economic space. Robert Gotleibsen. I really recommend his work. He’s been in the game for a very long time. And he’s not quite co-authoring, but basing this article on an extended conversation.

With Christine Todd who’s based in Boston and Christine is the fixed income head for a Monday, which is. Europe’s largest investment manager. So we’re going to assume that if a Monday is the largest investment manager in Europe, And Christine Todd is the head of fixed income investments than she probably knows a little bit about the bond market and the big picture. So in this really good article,

I’ll post a link to it too. Here on thePage@supplysidepartners.com. They outlined about 10 key factors that are going to be relevant. From the new Biden administration. I want to spin you through about sort of seven of these really quickly. Number one. Us consumers have 2 trillion in spare cash. Now this is Christine Todd’s analysis with Robert God leaps. And this isn’t me making it up.

2 trillion in spare cash, but importantly, it’s not evenly distributed. So all that stimulus money and pent up. A UBI bits and pieces. Have not been evenly distributed. And there’s a sort of a disparity African-Americans women, Hispanics, Latinos are not evenly represented, which they both argue leads to a huge prosperity divide. And I don’t know how much history,

But the more you see huge prosperity divides, the more you see an unraveling social fabric. So we go back at cost to Nathan Louis’ magic formula. When you get low taxes and stable money, when you get a solid middle class, you don’t tend to get that insane prosperity divide and you don’t tend to get that social meltdown.

So friends. 2 trillion in spare cash waiting to be unleashed. We’ll get to that in a minute. Number two. Along with that. A massive stimulus and 2 trillion in spare cash in the us domestic economy. We’ve got lower interest rates in QE. Which of course expand this inequality by doing what but something I’ve been staring at for months, inflating asset prices.

So you must have been. Asleep. If you have not noticed well, cos you’ve noticed the massive. Bubble in the equity markets here in Australia, property markets are going through the roof. How is that happening and what it’s doing? Of course as it’s entrenching that inequality, isn’t it? Because there’s asset prices go through the seal and guests who can’t afford them.

The poor. And we get that increasing level of social breakdown. Number three. President Biden’s plan to double the minimum wage to almost $15. And typically what this, it sounds to many people like a wonderful idea. Yes. All these people who are working hard at difficult jobs. They deserve to be paid well.

Unfortunately, of course what it does. The first thing is that, president Biden’s able to mandate it for us government when a us government workers on minimum wage. Going to get a hefty, big pay rise, but he can’t mandate it for the private economy. So as that pressure comes onto the private economy, it will, of course, people will begin demanding that private companies provide the same level of minimum wage.

What do they do? They usually don’t just roll over and hand over the cash. What they’ll do is automate. So they’ll automate every single process possible, which will get rid of jobs. They’ll offshore it. Or of course, they’ll rise, raise prices to cover the huge increase in, and this is industries, particularly that have got.

Top heavy with low paid workers, so you can look at areas like some areas of food, retail, service jobs. Whatever they can’t automate, they’ve got to increase prices. Right? Which will drive inflation. Often, this has whatever government gets in the business of trying to impact markets, the results. There’s always these endless knock-on effects. So what a minimum wage increase will do, or basically put huge numbers of poor people out of any chance of getting a job.

Whether through AI robotics, automation of shoring. And the rest of us will be paying for this wonderful idea through increased prices. Number four. We’re looking at from president Biden, increased wealth taxes and capital gains taxes. And of course, Texas on deceased estates. You’re listening to a great interview this morning. The government doesn’t create any money, friends. It only takes it from somewhere else. The government doesn’t produce wealth.

I’m sure. They would say that they create the conditions by which wealth can be pursued, but that hasn’t been my experience in business and the least not thus far. So we’re going to see increase in wealth, Texas capital gains to see some States and friends, what to really rich people do. Every time the government does this, they find a way around it.

So remember the great French actor, Gerard Depardieu became Russian. He’s his French is this French could possibly be, but now he’s Russian because they just went after him with massive wealth taxes. So people leave. People leave. They vote with their feet. I Look at the massive exit is from California.

Into Texas and Florida, sooner or later. When governments, they get less of what they tax, so people will find a way around it. So it just encourages all sorts of avoidance. Number five. We got some inflation drivers, according to Christine Todd and Robert got Libson in the U S economy. Of course.

We’re going to see a huge surge in community consumer spending when the vaccine stuff kicks off and people start getting out and getting amongst it. So if there is going to be a crash, I don’t think we’re going to see it. In the very short term, but we are going to see this big surge in consumer spending. And of course that will drive inflation as prices rise.

As a huge amount of new dollars, but they’re not unlimited begin to chase. Relatively scarce goods and services. So number six, almost done. Christine Todd and Robert got leaps and tell us that the us is facing skilled labor shortages that are impacting the supply chain, skilled labor, all the jobs that.

People stopped doing carpenters, plumbers, and people who are capable of working with their hands and important ways. We can only do so much with robotics at this point, right? Sooner or later, this is having an impact on supply chain. Which only has put pressure on wages, which will put pressure on inflation. Last one.

Green objectives. Huge initiatives around green objectives for the us under president Biden. But interestingly, it’s not going to be done through regulation. Apparently according to these guys, it’s going to be done through capital markets. So if you’re in business, you won’t be able to get money. You won’t be able to get money.

Unless you’re singing from the green playbook. And we’ve had an example of that here in Australia, just this week. So a and Zed, one of our major four banks. Decided not to fund. Important investment at the port of Newcastle where a huge amount of Australia’s coal goes from. And then there’s another strain bank stepped in two days later and said, Hey, you don’t want to do it. We’ll do it for you. But interestingly, this is where the pressure is going to come.

We’re going to see. You won’t be able to access capital and unless you are singing from the green and politically correct playbook. I guess the implications of that are significant, right? It’s interesting. That capital capitalist economies free-market economies have ended up figuring out how to look after the environment. I Go to parts of Africa, go to parts of.

The emerging markets, right? What do you see? Huge amounts of pollution. It seems that free markets eventually figure out how to not only produce wealth. But also to minimize impact on the environment. And pretty much, if you just leave us alone to do it, we usually figure it out in time.

But you can see here, government’s going to distort capital markets now. All right. So viable investment opportunities and not going to get funded because of, distortion, that’s not coming from direct regulation, but rather through manipulation of capital markets, my gosh.

I was going crazy. It’s going to hell in a handbasket friends. I now understand why this is called the dismal science. I’m a pretty optimistic guy, but you spend enough time reading this. Look, as far as I’m concerned. This is all inputs, right? There’s only information. And our job is to take this information and make a stupid choices to look after the people we care about to look after employees, to position our businesses and our wealth and our finances to weather.

What has to come, Peter picked it back in 2006, but the next one. Has to be big. I was listening to Jim Rogers the other day. Of course Jim Rogers. Co-founded that the huge fund with George Soros and listened to his book what are your book? Investment biker?

And he was introduced recently. I This is a guy that has been at the heart of global macro for decades. And he just said, this next crash will be the worst ever because the debt is off the scale. All right. This. I’m not going to ruin your day, your night, evening, wherever you are with this stuff. But

There’s some highlights, friends, check out this speech back in 2006 and Peter Schiff. That’s it from me today. Please make sure you check out the website, supply side partners.com. Flip me an email or get in touch. I’ve I’ve crept back on to Twitter. Struggle dealing with. With Twitter, but it’s there. So if you do a search for supply side podcast or this supply side podcast, you’ll find me there on Twitter and that’s getting underway. Please make sure you’ve subscribed. Police post these links on your social feeds. That’d be a huge blessing to me. God bless everybody. My name’s Jonathan 📍 Doyle. This has been today’s supply side podcast, and I’m going to have another message for you very soon.