The Magic formula
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Well, Nathan Lewis, welcome to the supply side podcast. Thank you for joining us. Take us to the central thesis in the magic formula. What, what are you trying to tell people.
Well, it’s kind of the it’s, it’s really refining the supply side story with, from the 1970s, essentially for a new generation and adding, you know, all that we’ve learned in the decade since then for, I kind of imagined a young person, 18 or 25 or something like that. Wasn’t around for the Reagan years and all the discussions and all the white papers that went back and forth.
And they needed a place where they could just pick up a book and get the story sort of packaged nicely for them. And, and really the supply side era, the seventies and eighties, they came up with essentially what I wrote out in the magic formula. That there’s lots of things that are good for economies, right.
Innovation or good regulation or education or a hundred things you could less, but there are two things that are really important. And they’re so important that if you get that right, then two things happen. It doesn’t really matter the other things right. And wrong because it’s so good. It works so well to get those two things, right.
Then, you know, it’s not that big a deal. And the other thing that happened is if you get those two things, right, you can also get the other stuff, right? Because you you’re in a situation that’s already prosperous and successful enough that say, Oh, I got that much done. Right. I built the house. Now I can paint the walls, you know, kind of, kind of a thing.
And, and if you get those things to do things wrong, then it doesn’t matter how many other things you get. Right. It’s all gonna burn down.
So the, the obvious question that came through the entire book as I read it, and I’ve come into this space very late in life is your arguments are compelling. How has it being missed? Like, is it just a core attribute of, of political economy that sooner or later atrophy sets in and people just go back to whatever’s expedient?
How is it missed?
Oh, good. Yeah. Well, I, I didn’t mention what it is. So the magic formula is low taxes and stable money and it’s real simple. Um, you know, if money is unstable, it’s Peffer economies, right. And if taxes are high, guess what? It’s also bad for economies. And if you get two wrongs, you know, two things wrong, two big things wrong, then it’s really bad for economies.
And that’s basically what happened in the 1970s, which kind of inspired this. But then they took those principles and, and looked through all, you know, centuries of history and say, Oh, you know, this is work stuff works pretty well. You know, why don’t I think th it’s, it’s an interesting question because by 1990, It was clear, this stuff worked, right.
It was, it was very clear. And then the question is, and then there was effort made to kind of popularize and stuff, but it just people weren’t interested and it’s like, what do you mean to not interested? Like this is the magic formula, right? This is how societies can come from nothing and become world beating super wealthy success stories like Singapore, you know, like the United States.
And they weren’t interested, but a lot of this politics, we have a lot invested now in economic manipulation. The reason we don’t have stable money today is based because people love economic manipulation so much that they don’t want to give it up. And you can’t have stable money unless you give it up.
You have to give up economic manipulation. And then people, reason people don’t like low taxes, a lot of it, I I’ve really come to appreciate more in the last five years or so is politics. And they wrote this into the constitution actually. And people understood this in the 18th century and then they kind of forgot it by the end of the 19th century.
And it’s really, uh, you know, it’s like it’s Benjamin Franklin, you know, you know, three wolves. And his sheep decides what’s for lunch. Well, if you make taxation, discretionary, which means you can decide that guy pays taxes and that guy doesn’t then inevitably the majority wants to tax the minority. And since the wealthy have all the money and are also inevitably a minority, you know, the wealthiest 10% of the people are always only 10% of the people, the other 90% vote to take their money.
So, is it essentially, I mean, does it, is it really in the final analysis that there are a cohort of people who have the leavers of political economic power have I’ve arranged a system that perpetuates their own success and progression? Is it that simple?
That, you know, that’s, that’s always, this is part of politics, right? Uh, you know, self, self benefit in all these ways. And I, I think that what we have to do is we have to what I hope or what I hope some people do who read these books, take an interesting topics. First understand I call it the technical aspect.
Right? Does this stuff actually work? Does it work? And it doesn’t work well, you know, what are the results, you know, and not just, is it better, but how much better? And I think we’ve established that it is better. It works, the success stories. One of the things I wanted to make pretty clear is that it’s not just like a little thing, you know, it’s like, Oh, it’s a little better.
It’s gigantic differences. Just to give an example. Uh, as I wrote in the book between 1950 and 1970, Basically following the magic formula, this economic strategy that the GDP of Japan grew by 16 times. It’s not like, Oh yeah, it’s 2% a year right now. They got 16 times bigger. And between 1995 and 2005, the Chinese economy got 26 times bigger because I mean, that is the kind of growth outcomes that are actually possible when you get things right.
So if you’ve politicians are constantly talking about growth and the desire for growth, and that’s what works. Why are we texting? I mean, here in Australia, we’re paying 45% and you make a great point in the book. You sort of very simple point that sooner or later, once Texas reach a certain point, people begin to wake up in the morning and go, exactly.
Why am I doing this? And that was abstract for us until relatively recently. And in our businesses here, Karen almost passed out. I said, I said, darlin, seriously, 45% of. What we generate is, is appropriate in one form or another. So, and, and you make another great point too, about the moral aspect of what truly early in the book, you make the point that if you get the magic formula, right, you develop a certain kind of culture.
And a lot of the pathologies that are around high tech size should begin to these speaking. Can you take us into that a little bit about the, kind of the moral correlaries of, of the magic formula.
Well, just, we kind of know what works at this point and what basically works is what Singapore and Hong Kong would do basically, which is they have a more or less a flat tax, right? It’s not discriminatory toward tax agents that you pay this and you pay that or you don’t pay. This guy pays 45%. It’s everyone pays 15% like a sales tax, like a VAT.
We have the payroll tax. We already have these kinds of taxes. They work very well and they generate tons of tons of revenue and they’re not big economic drags in the constitution. It was, there was actually, it was actually a uniformity clause, us constitution that says, yeah, all taxes are supposed to be like that says, yeah, everyone has to pay the same rate, basically what it says.
And then basically what the, in the United States of the 16th amendment, they, they didn’t actually cancel that, but it was effectively overruled. And you got into this situation where, like I said, it’s three wolves and a lamb and a, and a sheep asking what’s for lunch. And the first impulse went from, uh, you know, the, in the United States, the first income tax was 7% for the highest earners.
And within 10 years it was 77%. Right. And then we spent a century a hundred years figuring out like, no, that’s actually bad for business. And what’s bad for business is bad for the lowest 3% of society, because now they have no work. Right. It took a hundred, it took, you know, 80 years for us to figure that out.
And now we’re at a state all throughout the Western world or the developed world where there’s a political equilibrium or compromise or balance that’s been found where it’s, and it’s just about 45%. Everywhere Germany, France, Britain, Australia, United States. When you add sales, state income tax, it’s just about 45%.
And it’s clearly a level that is confiscatory on higher incomes. It’s bad for the economy. It has horribly, you know, overly complicated tax and it’s obviously a bad, but for some reason, politics keep landing there. And the basic reason I think is it’s a balance. It’s a balance between the majority who basically don’t pay taxes at all, or income taxes.
Taking them once a, Hey, I have a great idea. I’m going to take his money. Let’s vote for it against the other side, which says no, no, but if we have taxes that are too high, then the economy starts to stink, you know? And it’s that political balance, which has been, which has been found, which is actually a bad balance.
It’s, you know, it’s like an agreement for mediocrity. And so I think going forward, uh, and we seen this because in Eastern Europe there was this huge flat tax boom, after 2000 and they had phenomenal growth, like insane mind-bending super fantastic growth and economic growth in these countries. The Russian economy got eight times larger in eight years, and then they, and then they, and they stopped.
They, they, you know, they started to raise taxes. I never, uh, upbringing comes again. It’s like, how can you get that wrong? After eight years of super success?
So what is that? What is that? Impulse?
It’s exactly that, right? They, they have democratic systems much like ours, and eventually a politician comes by and says, you know, lower incomes are paying when you add payroll taxes and VAT is on these, you know, in these bigger government countries, they’re paying 30% basically.
And the, and, and the wealthy guys are paying 13%. It’s not fair.
Well, you might’ve great point in the book. You know, obviously the U S had no income tax before 1913. And when I first came across that coming into all this very recently, I was like, that’s how did they pay for anything? But it was essentially tobacco sauces, alcoholics sauces, that sort of stuff. Right. So there’s been, yeah.
So there’s been successful. Moments in history where non-existent, or very low income taxes have been still allowed to culture to function and successfully
um, yeah, there’s, there’s, there’s an interesting story. Um, behind all that, which I only sort of touched on in, in the mat, the book, the magic formula, but I think it’s more important that than as I’ve thought about it since then, I think it’s more important. There’s been a lot of important developments in taxation just as there has been available to things like electricity and airplanes and 20 century things.
We think, you know, death and taxes are the oldest things in Maine and the world’s always professional. The oldest thing is human society. Right. Which is true. Right. As far as the first day, you had a society, you had taxes of some sort, but there’s been enormous improvements in taxation in the last 150 years, which we haven’t quite.
Got her hands around you. And I think it’s very important going forward from here in the 19th century, we, they, they basically didn’t have income taxes, basically. Nobody did. And the reason was, is because they kind of tried in the past, it was just a horror. It was just like disasters. They tried to, you know, thousands of years, Greeks banned income taxes, direct taxation because they thought it was just creative.
It was tyranny basically. And so they say they settled on indirect taxes, which are sales taxes. So it was excise taxes, which are taxes on individual things, you know, Texas beer, Texas salt, Texas on tobacco texts on pencils and tariffs, which are basically excise taxes on imports. You know, terrorists, separated by item, right?
Which soon becomes horribly complicated because you’ve got 10,000 taxes on 10,000 different things. And the reason they did that is so that they all, they had an early sales tax where they just said, whenever you sell something, you got to pay 10%, pretty simple. But if you think about it, Well, you guys, what do we sell your house?
You got paid 10%. When you sell stocks, you got 10%, you know, all the line, all the steps that go into the production of a product, four hits the store. You gotta pay 10% on every step. Well, you know, it didn’t work. And for thousand years, Societies prove that that that system doesn’t work. So then the first breaks, those was actually a functional income tax, which despite all the bad things about it, nevertheless, was able to generate enough revenue to fight major Wars, like world war one.
Now you have to remember, that’s all they had, right? They had this income tax, which we all know is a horrible, horrible mess, but it allowed them to get more than 5% of GDP of revenue. Or 10% of GDP to fight a big war. And then in the 1920s, you had the retail sales tax where they say, Oh no, we can’t tax every step of production.
We, you just tax the final retail product. And we don’t have, you know, 5 cents on paper and 3 cents on salt. We just say 10% for everything at the retail level. And that was actually a giant breakthrough. Now you could have a sales tax, which you didn’t have this insane complexity, and every time you have a tax, there’s a political battle, right?
It should the beer tax be 30 cents or 20 cents, right? No, you just flat tax for everything. Which generated a lot of revenue. It’s simple, it’s low. It was a huge breakthrough. And the next breakthrough was the VAT in 1950s didn’t even exist until 1950s. Now VAT is actually kind of an interesting, subtle thing.
Um, it’s usually thought of as being equivalent to a sales tax, but it’s really not. It’s actually very similar to income tax. Uh, and in some ways actually, actually there’s one, there was something before that, which is the payroll tax, which from the 1930s, Which they say, well, rather than taxing, when people spend money, you can just text them when they make money, flat rate, every dollar, you know, there’s no brackets, there’s no deductions just from the first dollar to the last dollar, 10%.
We know there’s usually an upper limit on income, but that’s kind of how it worked. Right. That was also a huge moneymaker, very simple. There’s no tax return. There’s no accountants. And then the VAT in the 1950s, So I think going forward, when we, when we think about what works, see, even in the old days, we didn’t have anything besides the income tax, it was income tax or the tax on salt stamp tax, right from the.
1770s. If you know, American took 1760s go American history, but now we have these things which can finally replace them, which are, you know, 10%. It’s a low rate. It’s super simple. There’s no tax returns. It’s uniform. Everyone pays the same rate and we can generate huge amounts of revenue with this stuff.
So I take France. France has one of the highest rates of taxation in the world. If you eliminate the income tax fresh. Cross it out, including the corporate income tax, just gone, you still get tax revenue about 35% of GDP. So you can have, if you want you, I don’t recommend it. You can have big socialist government with no income taxes.
Anyone interested in these topics has to come to this. You know, what do we know now? In 2020. So we had these development, these texts, and I worked for the fifties. Now we come to the seventies and eighties where we say, Oh, you know, income tax income tax is higher. Rates are bad. And then the, yeah, the flat tax.
And if you, if you follow these things, the United States, you, the flat tax proposal, we had the fair tax proposal, which is like basically a national sales tax.
Cause you, you made a point in the book you’re talking about Japan and you said that Japan actually had high levels of taxation, but they had an enormous number of deductions and otherwise to bypass. So does that work, I mean, to have a high nominal interest, a high nominal tax rate, but then allow large numbers of, uh, deductions.
It does work. Obviously it works well enough for Japan, but it doesn’t work very well in the sense that, uh, if they hit, they had high taxes just cause it was kind of like the fashion. Right. It’s just what people did. And then they made, they made so many holes in it that it just became, it’s like an imaginary tax system.
Right. Yeah, they basically, they basically develop, they, they change the definition of profits for corporations. So they wouldn’t have corporate profit, Texas, you know, they, they, they created so many, there’s so many deductions that if they had any profits, they just, if they rolled it into new CapEx, the profits would disappear and they pay no taxes.
I’ve been reading Ross, Douthat’s new book, the decadent society, and he’s got a chapter devoted to political sclerosis and he makes, he’s sort of making the point that the early political processes in the U S we’re obviously dealing with a relatively simpler.
Polis like a relatively simple world. And then he makes the point that, you know, part of the problem now is that there’s just such enormous cultural complexity, obviously there’s, you know, a vastly larger population is some of what’s happening in the taxation space. To do with just the sheer growth and complexity and our economic systems.
Like, is it just that as the world has grown more complex as technologies become, you know, what had, has, has the whole question become, is it more complex or is it still the fundamentals are essentially simple because the book just makes it that clear. It’s like when you do these two things, these are the.
Reasonable outcomes. Is that impacted by sort of cultural complexity population growth technology? Or does it hold?
No, I would say, absolutely not. For example, I would recommend if you had to have, if you could just say, what is perfect taxes, I tend to have the same opinion as people who have been serious thinkers about this, which is the VAT VAT. VAT is an awesome tax people hate in the United States because they don’t want European.
You don’t want to have a VAT plus an income Texas. I understand that and understand it. But if you could just, you know, from a technician’s point of view, What’s the best. It’s a variety specificity and the BTS. Well, simple people don’t quite know what it is, but value added is basically defined as the revenue of the company, minus the expenses a bit minus the non-employee expenses of the company.
And then you take whatever that number is, you know, and you multiply it by 10% and that’s your tax payment. That’s the whole system. It doesn’t matter how complex your economy is. That’s the system. And it literally is that simple. So you people say, ah, these problems are so hard to solve. No, no, no. This is just people wanting to act like they’re the smartest guy in the room, or, you know,
So the related question that I’m trying to get my head around is with the advent of MMT and the vast amount of currency flooding into the system. My, my understanding is basically treasury wants X amount of dollars to do whatever I hear in this country. And so they, you know, they issued a T bills and open market operations, and then the fed unicorn magic.
Puff of smoke money currency appears. Why do we need to text at all? If we can just endlessly print money or, I mean, I just started to wonder if we’re just printing money.
well, that’s an interesting question. I want to think about the MMT people is they’re not discovering anything to you. People have known that for 200 years. It’s just that they’re discovering it for the first time that, you know, they’re catching up with people. We knew what 200 years ago. And in fact, being the money creation, you know, issuing the current currency is a, is a kind of business.
And at times it’s been a private business and a time that has been sort of, you know, covering public. Business government business, but it makes money. It’s called senior age income and it is called seniors income because the senior is the Lord. So it just tells you how old this terminology is. Yeah.
There’s seniors income involved. And so that income does partially, you know, it might cover a small part of your expenses might cover, you know, More than all of your expenses. It’s pretty good. The long form of this discussion is it gets kind of complicated, but there have been times in the past when the United States or Britain printed a gigantic amount of money and spent it mostly during the Wars.
And the basic reason they can get away with that is because people were willing to hold larger amounts of money, which is very common in crisis situations. You know, they don’t trust banks, they put it in the mattress under the bed. And if everyone has $10,000 in, in $20 bills and the coffee can. Then the government is able to print $10,000 per capita for free is basically what happens.
And then what also, what typically happens is after the war. And there’s kind of like a. You know, risk aversion goes down and the economic boom happens and all the coffee can money comes out and the economy grows a lot, but the money supply doesn’t grow very much. So it, it didn’t recover as you could say, in the, in the decade after, after the war.
So we’ve seen this prop, this, this process in the past. And so nothing, the MMT people say today is particularly surprising, but where it’s going, uh, unfortunately politically is where things often go. Things almost always go when governments get their hands on the money creation mechanism, which is they start passing them money round.
And inevitably it seems like as part of this project, you know, they can’t just say this, right. We’re just gonna make money and spend it. Ha ha right. They don’t quite, they can’t just do that. So they inevitably make up silly excuses and there’s two books that are pretty interesting. One is Fiat money inflation in France by Andrew Dickson, white, which talks about hyperinflation in France, in the 1780s.
And there’s a, when money dies by Adam Ferguson, which talks about. Hyperinflation in Germany in the 1920s. And one of the surprising things in those books is that the whole time they’re making excuses, there are people making excuses, why they weren’t really doing what they’re doing, why, Oh, it’s going to be fine.
There’s no consequences. And you can get away with this. And we invented something new and you guys are also old fashioned and fuddy days. So this is kind of it’s, you know, you’re seeing this
Well, I heard someone say during the week that if, uh, if you are, I were to print counterfeit money, we get arrested. But, uh, but if the government prints it that’s uh, so, um, is there an historical precedent? I mean, your, your coverage of the history across your books is extraordinary for this level of currency creation.
Yeah, actually, like I said, and it was basically during war time, but it was only for, it’s only for a short period, because if you recall the discussion, my second book, it’s all about supply and demand. If there’s demand, everyone wants to put $10,000 in a coffee can, if that is what everyone demands and they went down to the bank and where it’s drew $10,000, it doesn’t exist.
You’re going to have to create the money. To give it to them, right. You’re actually under legal obligation to deliver it so you can get away with it sometimes, but eventually everyone’s coffee can, is full. And they said, okay, had enough. Some guy comes by and says, you know, passing more bills around. Well, if your coffee cans full, then what do you do?
Well, you got some more bills, you spend it. Right. And that’s kind of when the process of currency decline happens, but it’s not quite that simple, it’s complicated topic, but you have a sophisticated audience and we have lots of time. So let’s get into it. Where does the money go? Metaphor is a bit like circulating around the economy, like a liquid.
It’s not really true. Somebody has it. They either have it at home in a coffee can or it’s in the bank. Um, I mean, I don’t mean bank deposit, but banks themselves have some kind of. Money, which is basically deposit at the central bank these days. And banks just as people at home have money to coffee cans, that’s bank’s coffee can, right?
That’s the, that’s the, the money is there. Is there account at the central bank in the past, banks held about 10% of their assets at the central bank. And sometimes it was 5% sometimes in wartime, it was 20%, but it was like 10%. And what happened was between about well was really since about 1950 to 2008 banks had one.
Way after another of bringing that amount down, because if they could reduce the amount of cash on their balance sheet and substitute interest, bearing debt of some sort, it could make more money. And they got to the point of all of this, like very, you know, decades of increasing sophistication. Whereas after 2000 they had like, just like this tiny, tiny amount of cash it’s like us today.
Right? Well, we, we go, we to walk out the door to 40 bucks and five credit cards, right? As we banks are like, well, I’ve only got four. You know, the only way it works is if your five credit cards work well in 19, 2008, all the banks got their credit cards canceled and they only had 40 bucks and they were in a bad, they had to pay the rent.
And so they said, Oh, a bad idea. Well, then they had this long. Involve process where they got back to their old standard of having 10% of assets in the form of cash. And that required Pete celebration. When we talk about this. But I’m sure they know about it because banks know about it and it’s actually all codified and Faisal free and they talked about it for years and central banks had to create that money.
Right? All the banks need this much money. Well, if it doesn’t exist, you have a problem. So they had to create it so that banks would have it. And that’s basically what happened between 2009, when there’s, you know, there’s kind of some been some ups and downs, but, um, even up to this year, that’s why, at least in the case of United States, the central bank.
Uh, balance sheet expansion that took place in this year, kind of topped up that unfulfilled demand if you will. And so everyone who hasn’t followed this narrative doesn’t know about it, which is 99.999% of the people look at it and say, well, we’ll just print it. You know, we’ve spent the last 10 years printing $5 trillion with no consequences.
Let’s do it again. And. So now, so that’s kind of what we’re dealing with now. And I think now this six month period is where we are kind of going beyond that framework. The demand for banks is not obvious. They could actually, they could actually take on more than they have in crisis times during war time, so forth, but I’m not, I’m not persuaded that they want to do that.
So at what point does the music stop? Like when I listened to you, what does it, what does an MMT purist really believe that you can just indefinitely stimulate an economy by creating currency? At what point does the music stop? I mean, I was talking to somebody recently. Who’s just what you just said.
They they’ll inflate it away. It’s just going to magically.
Yeah. Something for nothing anyway, cosmic level, right? Violates all, all, all the conservation of mass and energy. Yeah. Yeah, it does. In fact it does, you know, the basic transaction that was going on was, was we give you something that you value, namely money in return for goods and services. That’s how it worked.
But if you don’t, if you don’t want the money anymore, that’s when the that’s when the game starts to not to work anymore. Right? If you want $10,000 in your coffee can then you are going to work and to get the money and not spend it. You’re going to put in your coffee can, right. All I got 5,000, I want 5,000 more.
Right. You’re going to work. Take the money and not spend it. But if you get, when your coffee cans full, you say, Oh, I went to work, I got some money, my coffee cans full let’s go to the restaurant. That’s when it doesn’t work anymore. Right.
and at what, what point does this hyperinflation happen? Like if you were just increasing the money supply.
yeah, hyperplasia is kind of a strong word. We’re we’re, we’re not really at that stage yet, but we have some of the important ingredients. And I think that’s worth thinking about, we had a lot of inflation around the world in the 1970s, but we didn’t have it. Wasn’t like it is today. And at the end of the sixties, debt to GDP ratios were quite low.
You know, it’s 30% around the world in developed economies. Deficits were pretty much balanced. You know, they didn’t have this chronic deficits that we have today. They didn’t ha they don’t have the social spending, you know, the, of social security, Medicare, which is responsible for those big deficits was much smaller in those days.
So. There’s more in, in the, in the terms of the United States political discussion, it was discretionary. Right? You can cut it. You can’t, you know, it’s, it’s a very, it’s a big political process to cut Medicare or social security. So you didn’t have the issues that you have today, you know, in the 1970s inflation.
Uh, was not a let’s print money to pay the bills situation. It was something, it was something, it was Keynesian, you know, economic manipulation, but something else was going on when it ended too, in the 1970s, you had Volcker going through like 18% interest rates, which, you know, these and the reason, one of the reasons they can do that is because the debt to GDP ratio is so low that even paying 12% on their debt, governments, weren’t going to go bust, right?
They didn’t have 150, you pay 12% on 120% of GDP debt. You’re paying 15% of GDP and interest payments, right. Things are, you know, I think they’re just getting going. This is like, you know, this is like 1971, uh, you know, in terms of timing, but we have different ingredients this time and the different ingredients are, we are printing money to finance deficit.
And we’re not just doing that. We’re also saying, well, since we’re bringing the money anyway, let’s also have a huge deficit. We’re not trying to cut the deficit, right? We’re going, we’re going all just like added on 10% for nothing. So this, you know, these are very new political, it’s all political. It’s a very new political ingredients.
And this is what you see in hyperinflation situations. Hyperinflations happened because governments can’t stop printing money. They can’t stop printing money because if they don’t print the money, you don’t have the money. They don’t have the money. They can’t pay. The government employees and they don’t pay the government employees, the military, uh, you know, comes in, boots them out or whatever happens.
Right. You have chaos.
Well, I was listening to where I sort of part of how my journey started was I was training for a marathon and I was running here at 4:00 AM in mid-winter listening to a lot of audio books. And I think I was listening to George Gilder and he referenced that, you know, the famous line that in the long run, rural, dead.
And, and I wonder like that really struck me. I remember where I was on the run when I first thought political expediency seems to suggest that basically. If you’re a politician, you’re your two terms at best. Right? So the music just can’t stop on your watch is that what’s happening? Like when you talk about, there’s no incentive to cut deficits, really because you don’t want to be the guy or the girl that turns the music off.
I mean, doesn’t that create a political system where the can is kicked down the road until it eventually, you know,
I agree and, and, you know, and what you see, you know, if you want to talk some, some, some red flags, we’re not, we’re not, this is not describing the current situation, but it’s something that we might get into and about. I would say maybe about four years is when you start to have like pretty intense inflation, like 19, you know, like late, late seventies kind of inflation.
Not hyperinflation, but you have to, you know, you have to have a few steps before then. Well, first of all, you just can’t roll the debt, right? Governments, not only have to issue new debt to fund their deficits, but they have to roll the existing debt. Right. It’s easy to forget about that. They have to sell new bonds and that, and if you’re in a 10% inflation scenario and they want to sell bonds at 2%, you’re going to say.
No, thanks. They can’t put a 10% coupon because then the deficit blows out so that the central bank buys it. It’s not even just the deficit, but the debt side of it. And the other thing that tends to happen somewhere down the line is tax revenues, just collapse. There’s a number of reasons for this. For example, often you pay taxes a year after the activity that is taxed, and then you can delay it six months.
Well, Everyone starts to calculate the same time. They say, well, if I delay it six months, money’s going to be worth half of what it’s worth today. So I’ll delay it six months. So where’s the money go at six months down the line. And when you get it, it’s only worth half as much. And so the government now has, you know, the tax revenues collapsed instead of tax revenues, funding, 80% of spending and 20% deficit now tax revenues cover 30% of spending.
And if you have a 70% deficit. Right. And so the government said, well, we have a choice either. We’re going to cut spending by 70%, which is, you know, like how does that work? Or the central banks gonna print the money? And we got to decide in two weeks, right? We’re not going to debate it for a month for a year.
It’s just going to happen in the next two weeks because we got to make the payroll,
So when you, when you look at those, when you look at the macro at the moment and you see, I mean, the Dow broke 30,000 for the first time, since 1896, uh, and that’s happening amidst a global pandemic, much higher unemployment, so many fundamentals under pressure.
How is, how can this not be. A series of extraordinary bubbles, like here in Australia today, real estate is just powering ahead. Uh, I sold a few positions last week and haven’t really told my wife yet because I’ve just kept going up and I’m like, so how is no one asking the heck? How can we be seeing equity markets going through the ceiling under these
Mark. It’s a very strange these days. They’re difficult to explain because you just, as everybody knows, they’re the most expensive we’ve ever seen and bond markets to the most expensive we’ve ever seen. But in the past, when you had really high valuations, you had really great growth, right? Yo you’d have five.
Yep. 5% growth and everyone’s drawing trend lines to the sky, right? Well, it was okay. We pay 32 times earnings today because earnings are going to be three times higher five years from now. If we just typically, when you get, you know, PE ratios over 25 across the whole market, but today that’s cool scenario is out the window.
So what’s going on. It doesn’t look very good. I think there’s a lot of factors I think, but one of the things I think is going on is you’ve got the entire global asset management industry. That’s kind of like in this asset allocation indexing kind of model, and if you don’t buy bonds and if you think there is potential for inflation or something like that, then you have to buy stocks.
It doesn’t matter what the price is. It doesn’t mind the valuation as you just moving the money around. Right. I mean, the sensible thing is to buy gold. So sensible thing is to buy, do something else, but they can’t do the sensible thing. It’s not in there. It’s not in there, not one of the buttons they’re allowed to push.
And is this all algorithmically driven? Is that what you’re leading to? That there’s so much of the trading is, you know, high volume or algorithmically based that
Well, I’m thinking more of like, you know, the, the realities of the other people’s money business, the institutional asset management business, where nobody makes a decision about. Asset allocation. So you get ads in markets which have silly evaluations. I think there are other things going on. A friend of mine who ran a macro hedge fund had an interesting comment, which stuck with me in the end.
He said, you gotta understand people in Europe don’t care about stocks because they haven’t set up their social economic system that where stocks matter stocks are like play things for rich people. And so bonds matter. And so what did we see in Europe? Bonds driven, you know, stupid, stupid high prices, right?
You might have negative interest rates, all this stuff, right? Everyone’s old fonts are, everything’s locked down on bond land right in Europe. And, and the central bank is very involved in the whole process, but he said, but in the U S we’ve built all these structures based on stocks, basically things like pension funds and 401ks and all this stuff.
And just, you know, just, it’s just more of an equity culture in the United States than there is in elsewhere in the world. And so his opinion was that stocks are being managed much. Like bonds are managed in Europe because. So much depends on it. You know, if the stock market went down 50%, two things, one is still be highly valued.
Even half, half days, prices still would be on the inexpensive side of things. And to every underfunded state pension plan in the country would have to wave the white flag. The day of reckoning would come, right. They would just be so underwater Mark to market. That part decisions would have to be made.
And that, that is, you know, what, if anything, or, or just all the, all the retirees, you know, But boomers retiring who would see their 401ks cut in half and all this kind of stuff. So that was, that was his opinion. He thought he, you know, which I tend to agree with too, is that the situation is probably more heavily managed than is commonly accepted.
As in too big to fail, as in politicians are simply not prepared to let the market correct?
Uh, there’s there’s things being done that are not obvious, which are keeping things up essentially just like just like negative, you know, bonds trading at negative yields for an extended period of time in Europe. Never seen before in all of human history. How did that happen? I mean, we know it’s been, it’s being managed somehow.
I did the, um, crypto economics program at Oxford. I want to ask you, there’s a suggestion that the fed is looking to create obviously their own CBDC the central bank digital currency, and give every us citizen an account. And then because they want to drive velocity of money, right? So they put $1,500 of fed coin into a seat, into your, into individual’s accounts and say, you got two weeks to spend it.
So I wanted to ask you what you thought about the possibility of that and what the implications are. And I guess related to that is the whole crypto currency space. I can’t imagine that governments and central banks are going to allow. Cryptocurrencies a free run. I mean, if you’ve been in the business for centuries of controlling currency printing and you’ve got a.
Genuine competitor mean is a payment rail. It’s terrible. But so I guess wanted to ask you about those two things. Do you think that central banks may move to bypass the commercial banking space and put money direct into people’s hands and push the velocity of money? And what your thoughts on whether or not politicians and federal banks?
Sorry. Central banks will allow cryptocurrencies to survive.
It’s not a bad idea. It’s actually what banks. I also had for since beginning of the fed, that’s what the federal reserve is. Right? It’s it’s central bank, digital currencies for banks. Since 1913, that’s what it is. And it’s just the it’s. The only difference is now you get your own account, not a bad idea.
I start to not like it when they say, Oh, and we’re going to get rid of cash. Right. Because I think you say, well, I don’t use cash. You know, I use my credit card for 95% of payments today or whatever. So what’s the difference? Well, I, you know, cash is kind of like the second amendment of money, right? It keeps them from because you had the option of using cash, just like you have the option of picking up your AR 15.
It keeps people, you know, makes them behave themselves. And then you don’t have to use it. So I like, you know, if you were talking about things much being much the same as they are today, plus. Central bank, digital currencies. I, you know, probably be okay, but then once you have that, you open up, you know, there’s, there’s quite a few things you can start to do with it.
Like you can start to do negative interest rates and you can, what you can do with cash. If cash exists, you can, and you can start to, you know, restrict people’s payments for something and, and that kind of thing. Once you don’t have a cash alternative, then it gets pretty creepy, pretty fast. And clearly they want it.
They want to go that way. And we might see that as soon as the first quarter of next year in Europe.
when you say that word creepy, I’ve also heard that they’re putting money directly into, uh, you know, everybody’s got their own central bank wallet, the ability of government to turn that off at any point. I mean it’s programmable dollars, right? So you’ll put your point being that if you’ve got a $50 bill in your pocket, you can get pitcher wherever you want.
But I guess what I’m getting at is I don’t want to sort of create a massive seller dwelling conspiracy theory. But if you look at the Chinese social credit system, As soon as we have programmable dollars. If, if in any way you’re a transgressor of any form in whatever that means the ability to turn your money off, like for government to government to literally go, well, we don’t want you to leaving your town.
So you’re, you’re not going to be able to fill your car in another city.
Hey, 12, 12 months ago, getting blocked on Twitter was ridiculous. Like, what is that? Are you talking about. I can’t tweet my opinion. Right. It sounds ridiculous today, but in 12 months it could be just normal, right? Well, yeah. You know, you’ve shut your mouth off on Twitter. Now you can spend money for two weeks, whatever it is, right.
And, and, and the related question of, do you think politicians and central banks will allow rival cryptocurrencies to survive?
Look at what you have now, you have the stable coins, which are actually kind of interesting, but not that widely adopted actually, which will be obviously replaced by the central bank, digital currencies. Right. There’ll be more competitive and they’re basically, you know, be free. There’s no transaction costs.
And then you’ve got the whole, the whole space of alternative stable. It’s like a gold link, stable coin, or some kind of currency, basket, stable coin, like, um, um, Libra was going to be that all got killed by regulation. You know, the sec and other regulatory bodies say, well, this is a heck of a, like a mutual fund or an ETF.
How’s it not different? How’s it different than a mutual fund? And no one had a good answer. So I said, well, it is. And so it basically just killed that to our business overnight. So the, you know, so, so the prospects for sort of alternative stable coins, not looking pretty good. And then you’ve got the kind of Bitcoin things, which are obviously not a mutual fund because it has nothing it’s, you know, it’s, uh, it’s a box of Vox of air minus the air.
There’s a lot of problems with those, for one thing that just. They’re just not suited for transactions. And then you can go on and on and on about how, how all the stupid things about them. I think they are, they, they do have some feasibility, maybe a role, not as currency, not as money, but just as sort of like a transactable thing of mutually accepted value.
I say mutual accepted value because it doesn’t have intrinsic value of like a company or gold, arguably. But I think it’s like modern art, you know, what’s the intrinsic value of an Andy Warhol print. And why do they trade for $5 million? Well, I don’t know, but if you could trade Andy Warhol prints electronically in fractional sizes, that might be interesting.
Right. And the other thing about cryptocurrencies is now the regular, the regulation regarding even the Bitcoins in the ethers and stuff is getting pretty successful, sophisticated. So, you know, the blockchain records, every transaction ever, ever made. If you have one connection between an individual and the address, then.
Anyone, anyone anyone has access to the data, knows all the transactions that account has ever made. every time you open an account at, at a, at a Bitcoin exchange, or every time you use Bitcoin in a, in a train, if you, if you, if it were possible to buy a box of pencils on Amazon with Bitcoin, well, immediately that Bitcoin to, to verify that you paid it, they would know your address.
Right. And it would be LinkedIn, Amazon, of course, eat lamb. Has guns gonna tell the MSA once, just one time you vote, you know, you revealed the owner of the address. The government knows everything that account has ever done. And now there’s there was, there’s a company called a chain analysis. There’s, I’m sure there’s many of these companies, but one is of the biggest called T analysis.
Just raised a hundred million dollars to expand. His business already has 350 customers, including governments, including the us federal government, uh, just participated in a department of justice crackdown that busted crypto holders for over a billion dollars. Whatever you’re doing, chain analysis is going to figure it out.
And the department of justice going to pay for them to figure it out. And you’re going to get busted. The only hope is that you could be in some foreign jurisdiction, you say, well, ha ha. I ran away to Paraguay. Well, as we know, from all the, you know, the, any money, money laundering laws around the world, which have appeared in the last 20 or 30 years, it doesn’t take that long for the government of the United States to put pressure on the government Paraguay and say, you know what?
You don’t want us to be your enemies. And that guy over, we know who he is. He’s busted. Put them on a plane and we can still be friends. So there’s nowhere to run.
Do you think, like in terms of what we talked about with say Bay day say’s, do you think there’s an inherent right. To financial privacy. As I, as we talk, it’s like the, as this landscape shifts, it’s like, you know, w what’s the old joke, what’s the, um, if you ask a, a centralist, what’s the answer to every problem, more centralization, do we have a right to financial privacy?
Do we, do we, do you think that’s an inherent inalienable thing that people should be free to within reason?
Yeah, basically, it’s basically the fourth, the fourth amendment, the United States, privacy of your own. Unreasonable search and seizure of your papers, which means you can, you know, the idea was you couldn’t just break into a guy’s office and go through all his records, looking for crimes. Right? Well, now you don’t have to break into offices all in blockchain.
On the constitution. Is it true that the constitution States that that nothing will be currency other than gold and silver, right? Is that correct? At the U S constitution?
It actually says gold and silver coin. It actually excludes all paper money in the constitution itself, which was always ignored.
Well, this is the thing I wanted to get to. Now, the second part of the magic formula being stable, stable money, which is, you know, obviously you’ve written so well about across your books. So my understanding thus far looking at say people like Mike Maloney is that every Fiat currency in human history, without exception, without a single exception has gone to zero every year.
Fiat currency with a debt to GDP ratio over a hundred or triple figures has always gone to zero is the first truth that the U S dollar will eventually, I mean, based on history collapse, do you see that a point where that will happen?
The history of paper currencies. It’s it’s, it’s almost, it’s pretty bad. It’s uniformly bad. One of the amazing things that Britain did and America did after the constitution, but not before is they had paper currencies that didn’t blow up. Cause all of them blew up beforehand. You got, you know, Japan in the 17th century paper currency were blowing up all the time.
United States in 17 in the 18th century currency paper currency is blowing up constantly, right? The first government paper currency United States is, or the America 1690 colony of Massachusetts printed money to pay the soldiers course ended four-plus so, yeah, it was pretty bad. And the amazing thing that Britain did was.
To break that cycle of disaster and eventually governments around the world, imitated them toward the end of the 19th century, the second half of the 19th century, the United States first. And then. Germany and France and all these other places. And now, you know, since 1971, but essentially we, we are going back to the, the norm on the other hand though, too, to set aside very gloomy doomy expectations.
Unfortunately, unfortunately, countries can get into a cycle of. Just kind of constant appreciation for a long, long time. The currency might end up being worth only a million of what it was worth before, but it doesn’t matter. It, it just can keep going. You know, it’s not a hyperinflationary scenario, but it’s a situation where there’s just one devaluation appreciation after another and, you know, 20 30% CPI numbers just become the norm for decade after decade.
If you look at the history of the Turkish Lira or the Indian rupee or, and take the Italian Lira, the Italian Lira used to be the workforce. The same as French Frank was w which was worth about 100th of an ounce of gold and 19th century, but it it’s pretty reliable, reliable currency. And then if you remember, just before, when they, when they transitioned to the, to the Euro, one Euro was worth, I don’t know, 2,700 Lira.
Great. Well, that’s pretty bad, but we never say, Oh, there was hyperinflation, Italy, you know, they just kinda, it just kinda went down bit by bit for a hundred years. That’s why, unfortunately you can get into those kinds of situations too, where it’s just continuous. Stinko.
let’s talk the gold standard. So this is something that you’ve devoted a huge part of your life to and something that I’ve just become very interested in over recent times. So do you see a future where the U S dollar is backed by gold again?
Yeah, think it’s possible. I think we’re going to have a chance, uh, and I I’ve, I’ve been quite aware of this for awhile. Um, that’s why I actually, as I kind of implied in the last chapter of the book, the magic formula, which came out last year, I saw that we’re going to have, I think we’re going to have a crisis period.
And I didn’t think there was, I didn’t know there’s going to be COVID and all this stuff, but, you know, You pilot this much firewood, something catches on fire. If you’ve read the book, the fourth turning and all this stuff, everyone everyone’s read that these days. And I say, you know, well, The firewoods all piled up.
Nothing I do about that. I can’t say, you know, take away all the firewood, fix, fix all the problems right now. I can’t do that. No, one’s going to do that. But what you can do is, is when you get to the point where people are ready for new solutions, as the world was in 1945, for example, right? All, everything else was on fire and rebel, like, well, let’s make, let’s build new things, right.
They had the Bretton woods here that I am actually at the United nations. Many of those things kind of, kind of spooky evil things, but nevertheless, you know, they had the CIA yeah. The military industrial complex, whatever. Right. You’ve started to build all these new things. When I wrote the book, because when it was time to build new things, we had to have a blueprint.
And you going in, you’re dealing with, you’re dealing with people like Donald Trump in the middle of a crisis. Right. So you can’t say, Oh, a comp it’s very complicated. Go study for your PhD and get back to me. It’s like, no, for words, low taxes, they will money go do it. Good luck had to be real simple. So that’s kind of where that comes from.
So. I see there’s going to be not, I think there’s going to be opportunity, right. And this wasn’t true in 2019. Right. But it’s true now. We’re just like high on crack. We can print, we can just have a 60% of GDP deficit and the fed is going to cover it and everyone’s, and everyone’s happy. And we can just do this again and again.
Oh, okay. Well, eventually something’s going to happen and you’re going to have to have, you’re going to have to have a new solution at that point. They’re going to, I think you’re going to say, well, what are we going to do? We’re going to have a central bank full of the same kind of guys that just made a mess of everything, right?
Just this, just these PhDs, bickering to each other about gobbledygook. And we’re all gonna like, you know, rely on that. No. So that is historically when you get interest in gold standard system, what you often find is that the people who like. Gold standard systems, other people who had hyperinflations, you know, why the U S had the lion in the constitution that only gold and silver coins or money?
Well it’s because they had a hyperinflation and paper, money hyperinflation, 1780s. They knew that it didn’t work, right? Like, no, we’re not going to do that. As I mentioned, you know, the first thing that Mao Zedong did and when the communist takeover China, it seems to be the gold standard because the nationalist government had hyperinflation yet, you know, in your head trillion dollar bank notes, there’s going to be support for that.
who will drive that?
The common people in the United States, just the same as calm people all over the world. In China, in Afghanistan, in Nigeria, they all know gold works. They just know it. And they all know that all these central bankers blah-blah-blah lying on TV is not really in their interest. They just know that, right?
Because that’s been, that’s been true for 5,000 years. And so that, that support, that support has always been there, but you put, you needed, you needed the brains you needed, you needed the Ana, you know, you needed the Jefferson’s and the James Madison’s too, to make the policy and make the government institutions and to make the thing work, you need the brains, you know, to, to, to do that.
So I kind of wrote a book for them, the people who would be charged with building a system like this, that didn’t blow up.
and is it true that historically when a gold standard is reestablished, that it absorbs all the excess currency in the system? So the gold price is set by the money supply, right? Is that correct? Like it, my understanding was that if you, once you reestablish a gold system, you have to account gold has to account for all that currency washing around the system.
Oh, no, that’s, that’s, that’s kind of legendary horse shit from the mid 20th century. I say, you look at the historical examples and, and the, and the most relevant historical examples are the 1920s. In 19 in world war one, all the major currencies in the world. And most of all, the minor ones too became floating currencies.
Many of them had hyperinflation and the entire global gold standard system was rebuilt after 19, 19 beginning with the us dollar. And so we have this, we have, you know, dozens of examples of countries going from Fiat. Sometimes hyperinflation, sometimes not hyperinflation, but dramatic devaluations as France had, as Italy had going back to gold center system.
So you can look at it. What did they do? What were the characteristics? And this story of like, Oh, we have to, you know, we take the amount of gold you have in the vault and divided by, you know, the number of bank dos you have, that didn’t happen. Right. That never happened. Uh, you know, or you say, Oh, you have to have a hundred percent, you know, reserve coverage.
No, you don’t. That never happened. No country had a hundred percent reserve coverage. Right. They all went back. They were all successful. They just, but they didn’t do that. And, or Bretton woods, Bretton woods basically reestablished the world gold standard system. And, and, and it functionally. And then, but there was a lot of like, those it’s pretty Rocky the first five years, but really in 1950, around 1950, it really kind of locked into place.
You know, Jeremy, Japan, China, all in hyperinflation, all went to gold standard in 1949, 1950 plus Britain and the Western world. And once again, all these things that people say, Oh, you have to do it this way. No, you don’t. That never happened. So what happens is you, you pick a number, a sensible number four, The value of the currency and a couple of ways you can do this, which I kind of, which I wrote a chapter about in the book, but it’s, you know, you basically pick a sensible number for the United States.
It was $35 now it’s, which was also the pre-war number. And then you, then you manage it, you know, it’s kind of like an open-ended thing, but you just do what you have to do to keep the value of the currency at that level. It’s also, that’s what a gold standard is. It’s. It’s just a system that maintains the value of a currency.
According to a benchmark, it doesn’t have to be gold. It could be silver, it could be a currency basket, you know, all these stable coins, you know, the, all these cryptocurrencies that are coming out until they, the sec made things difficult for them. It’s all exactly the same thing. Right? Why does it, the ETF for the S and P 500 has the same value as the S and P 500.
They only have ever asked that. Well, Basically, they do exactly the same thing as the gold ETF does, which also maintain, you know, so that, so when you understand the methods that actually all these systems use, you know, the GLD ETF, spy, ETF, gold standard system, it’s all the same thing. And I wrote a whole book about it, which is the second book, golden monetary pillars.
So it’s very important. That somebody somewhere has a good grasp of that. And I’ve kind of reached out to the crypto guys because the economists are knuckleheads, but the crypto guys, a bunch of computer guys, they’re super smart and they don’t know anything. And they’re willing to learn and put in people who are smart and willing to learn, can figure it out and about.
Three days. And once you get a mass of people, a hundred people thousand people who are involved in cryptocurrency, stable coins or something like that, who say, yeah, that’s how you do it. Then you’ve got that critical, massive of societal knowledge to make these things happen.
you think there’s something inherent to goal D are you a true believer in the sense that there is something. Truly unique to gold that, I mean, history suggests is it simply a case of, uh, it’s it’s done its job. It’s, it’s functional throughout these key moments of history, but do you see it as a, as a particularly unique commodity that as an intrinsic link to, you know, human political economy,
Gold does have certain characteristics which have been commented on many times. If you look at all the things in the world, they’re not really that many that can serve at the same function in the same way of being, you know, having high value and being extremely durable and so forth, sub divisible and all the, all these things people talked about.
But that does alone does not explain gold sort of almost magical qualities. And ultimately I think it’s because humans need something that serves as the Polaris, the North star, something that serves the role of money. That’s something of stable value. They somehow created it. And it’s a bit of a mystery, how exactly that happened, but they did.
And, and to get you give an example for thousands of years, the price of the value of silver was quite closely linked to gold and it had some longterm variation, but the short-term vacation was pretty small year a year. It was very minor. And if it went from, you know, 12 to one to 60 to one over 200 years, like, Oh, that looks like a big deal for us today.
But if you were living there, you’d have a whole lifetime. Where it went from 12 to one to 13 to one, and you’d be telling your kids about, wow, okay. They were silvers at 1201 versus gold. No one would care. Right. So it was amazing. Silver for thousands of years was amazingly stable versus gold. And then something strange happened in the 1870s, which is an interesting discussion.
And then it wasn’t for the first time ever. And so how, you know, how did that happen? And so basically because humans needed a small denomination version of gold. You know, you couldn’t, you know, a gold coin, you just can’t do much with it because it’s worth a thousand toddlers. Right? Most people made a thousand dollars entire year.
Um, so they needed a small denomination money. And so they somehow made it and it was all over the world. Right. It was true in Asia is true in Africa. It is true in India, all over the world. Silver had this quality it’s that without any kind of government agreements or private agreements, it just did it.
I think gold still does that. You need something. With those qualities. And somehow we made it oddly enough, it’s kind of mystical, but unlike a hundred economists goofy ideas that they got sitting on the body, it actually works.
what are your thoughts on ETFs? Like, I’ve heard, like, I I’ve got a position in ETFs, but I’m like gold was private citizens, as you know, in the U S couldn’t hold gold. What up? It was not in 74.
repealed. Wasn’t it was at 7,400 Gerald Ford. So the thesis that if governments decided they didn’t want private citizens, Accessing gold.
Your ATS could be shut down. Also. It’s kind of a thing as crossed that the fund managers actually do have access to the physical gold. Are you relatively confident that ETFs are still a good vehicle?
I don’t like them, the GLD ETF in particular. I don’t know if you need to follow these things very closely, but the CFOs keeper signing there’s, you know, it’s very spooky and the thing is performed well. Right? It’s fulfilled all, it’s all his promises. I would look into other ETS. I personally am fraud. Uh, if you’re looking, if you want any ETF, the Sprott physical gold ETF, um, just cause I, uh, I know the, you know, those guys tend to be more reliable.
Um, it is actually redeemable in bullion for the small investor. You can actually take your hundred shares and turn it in and you’ll get a coin, which is kind of amazing.
When you look at the macro now, I mean, my thesis is simply a strong position in physical, precious metals, relatively strong cash position. Should there be a significant correction? Can you poke holes in that for the average, the average punter, as we say, here in Australia, given what’s what, what the, what the macro economic outlook looks like over the next decade or so?
I tend to favor a similar position. I have a lot of golden cash it’s, you know, it, it’s not very exciting. Um, but it’s pretty, but it’s pretty durable, right? When things go goofy. The main thing is to survive. If you survive, you end up in the top 10% of your big winner just by getting to the other side.
With most of your wealth intact. And that is the main thing you might. So you might make more profits in Bitcoin or junior miners or a thousand other things, but you might also get blown up along the way, um, or something might happen. If there’s one thing I would, you know, apply a little caution and it’s tempting now to say, Oh, I don’t want stocks because they’re super expensive.
I don’t want bonds because they’re super expensive. I think that there can be a tendency to hold too much cash. And we were getting into a situation where. If you hold too much cash for too long, you’re going to get killed. It’s not necessarily go to zero, but it might go 95% of the way to zero. And so, and so if you look around and things, the things beside gold that are pretty interesting, I think there are a number of individual situations.
The stock market, not necessarily inflation related, obviously. Wow. Goldmine. Okay. Yeah. It’s the same trade, right? If you look at things that are not the same trade, there are a number of situations. I think just, you know, just widows and orphans, stocks, like electric power company, you know, beer maker, something like that.
It’s a real simple, stable thing. I, I like, I tend to like mobile phone companies, you know, no one’s going to cancel a contract. They’re pretty stable businesses. They’ve generated a lot of cash and any combine, you can get them at like a 10% earning. I tend to use it. Term earnings yield more often these days to compare to bonds, you know, 10 times earnings, 10% earnings earnings yield, and they have some inflation protection.
If you have 10 years of inflation, they’re probably just giant Jack up the prices and everything will be kind of like, you know, in line with the CPI. And if you to look at it as a inflation protected bond, playing 10%, that’s pretty interesting, but more than cash, maybe more than gold. So I tend to look and all of a sudden the sense of diversification just.
Not have everything be the same trade. I tend to think some situations like that are, are a worthwhile these days.
We did really well on the, uh, the Vanek ETFs. They’re, they’re an ETF. The underlying is e-sports and gaming computer gaming companies, because when COVID hit, I thought there’s just going to be so many people just sitting there going realize e-sports is a, is bigger than the NBA. Now it’s like, Well, I was talking to my wife and my come down and look, look at these people sitting here, they’re playing computer games.
So the ETF there’s now there’s a solid ETF. And I thought if the economy completely tanks there’s a whole lot of people are still going to be one in their platelets, still be sitting on PlayStation. And X-Box so something I meant to ask you at the start, you were a real historian of these great sort of historical movements in finance and gold.
Why, what attracted you to the space? Why of all the things you could have done with your life? How did you end up doing this?
Yeah, it was just kinda, it ultimately just kind of destiny. I, I think. You know, destined to do this stuff. And there’s a reason why people don’t do this stuff. And the reason is, is that it’s very hard to make any money at it, which means that it was not done. And what it comes down to is I recognize that the importance of these things as I think you do, but, you know, basically if I didn’t write these books, then no one was going to do them.
Or they would do them badly. Um, you know, there’s not many people who can do it. And so I can tell you what kind of, where it comes from. A lot of, especially my first book in particular, I came to understand that there was this little group of supply ciders from the eighties who had this amazing knowledge, but it was all, it was, it was, it was like the oral tradition.
It was literally like the African tribesmen oral tradition. You sit down with the master for about a year and he tells it to you over a cup of coffee. Literally that. And if you look at, if you, if you read Jack Kim’s biography, it tells you that Jack Kemp did that to him. Like, just like I’m describing, or if you read Jude wineskin and, and Robert Mandela and, and the reason why that.
Happened that way is because in those days, you know, you didn’t have the internet either. They would occasionally write op-eds, but just writing a thousand words, you know, you can, you can’t save it. No one, no one learns very much from that. And unless you write books, it’s not going to spread beyond that little circle.
And if some point the chain might be broken, right, you just does the knowledge just doesn’t get transmitted. So, so especially the first book why I wanted to, I brought some of the tax issues, you know, Tax issues, but those were better understood even though even there, the great post 1980 post Reagan book was never written, I think, and I want to get into the money story side, because that was, that was an important thing that was just not understood at all.
In the eighties, you tended to get people who were low tax guys, even, maybe Democrats, but they just didn’t get the monetary stuff at all, you know, on, on the right to tend to be Milton Friedman my interests and a lot of the gold standard advocates of that time up to 2000, let’s say. They had the heart in the right place, but they didn’t have a clue.
They just, it was just one stupid thing after another. And they’re just not there. Everyone knew everyone. The reason why I had a terrible reputation everyone’s at the IRS, like some kind of cook was, everyone could tell they weren’t ready for prime time. Everyone could tell that there, you know, They didn’t have the chops, the mastery of these topics.
They had the right idea, but they didn’t have, they didn’t have the mastery. Like, as, as I, as I, as I like to say, you know, we could say, well, yeah, airplane, great. If you’re going to fly from New York to Los Angeles, definitely using an airplane. Right. Definitely is the gold standard. But unless someone knows how to build an airplane down to the real engineering of it, then you’re just, you know, you’re just sitting around talking about airplanes, right?
You need someone who knew who’s who, who to make the thing work.
Well, as I read your stuff, and as I talk to you, I think for me at the basis of it all, is that it’s about human flourishing and the common good. Like if we build systems that may me coming to this so late, I, I, I just think, I thought that most politicians and central bankers are reasonably good actors and maybe they are, I don’t know, but I just kind of, I said to my wife, I said, I don’t want to sound like that crazy guy living in his mom’s basement, but.
I think there’s some pretty bad people doing some pretty bad things with the global monetary system that maybe they shouldn’t be doing. She’s like really? I’m like, yeah. And linked to that was this idea that when, when people produce goods and services that people actually want, you know, good things can happen and there’s an inherent.
No ability in work and, and business. And I think creating the macro structures that, that you’re putting across here are just central. And I guess maybe it’s when you have kids or I just got three young kids and I’m like, I actually begin to, I think whether they’re talking about them being the first generation that will more than likely have a worse standard of living than their parents in a long time.
I wanted to ask you a hypothetical. So you get a phone call tomorrow morning from president elect Biden. He says, Nathan, I just heard this great podcast with Jonathan Good job. He invites you to rebuild the American monetary system with no holes. Barred gives you, gives you the keys to the fed computer.
What would you do? What would you say to him?
Politically we’re in a difficult place because all of these things are really entrenched. Just, just like I said, right. We’ve we’ve piled up all the firewood for this. If you will, you know, this fourth turning crisis, whatever, you can’t just skip it.
Right. Theoretically you could, but in practice you can. Yeah. And so I, you know, I’ve always, I’ve been building all this stuff for am. I be pretty soon, you know, under 10 years when all that stuff doesn’t work anymore. And he said, well, how do we get ourselves out of this mess? You have, you’d have to stop running deficits.
Well, how do you do that? We’re gonna have to, you’re gonna have to reform everything. I see. I can just see the pressure is building for a step towards the United States called federalisation, but it basically returns to the original form of the constitution, which is. Taking all these things that the federal government has started to do the centralization and pushing it all back on the States.
At some point, you know, you’re going, there’s so much. So what do you do? Well, often it’s easiest just to fix everything at once. Just rip the bandaid off. Right? And you say, well, just say as of January, first of the next year, or if you’re really in a crisis next week tomorrow, all federal welfare programs are done.
The canceled, just done. No more checks in the mail. Fire all the employees sell off the offices. They’re just done say, well, what happens to all the new people say, well, you know, let’s let the state governments decide, right? You can set up whatever system you want. You can impose whatever taxes you want.
Do your best. You have a fully functioning government. They actually, I mean, States actually doing all this stuff anyway, they’re actually the ones that are administering all these federal programs, always healthcare programs, so forth. So it’s all, it’s all in place that would, you know, you basically cut the spending in half right there, maybe more.
And then because you cut the spending in half, you’re going to have economy crisis. Right. So, well, how do we get the economy out of it? Crisis, you have a huge tax reform and you could bring up the examples of Germany and Japan and Russia. And if you get into the historical stuff, which I get into, but anyway, That’s when you bring in your 10% VAT and you say, let’s just repeal the 16th amendment, get rid of the income tax and impose a 10% VAT.
The United States that basically pays for the military and the national parks and someone to put stamp your passport at the border. And that’s the federal government, which is actually the federal government in the constitution. That’s what the federal government is supposed to be. And it was. For both of us history, you know, all this welfare stuff in United States, except for social security didn’t really exist until 1964.
It was just the military. It’s the United States with the military and, and some public works spending because of the new deal, but it wasn’t, it was pretty small. So we’re basically just going back to the model of the constitution and you could do it at a stroke, but only when people are ready and it would be really interesting because.
The States would then have mandate to take care of these things if they want to, but they would build it from scratch. It would all be brand new. Right. It wouldn’t be mad. It would be something
but that created a highly mobile population, at least for a while. Right.
Because I noticed that color, the exit is from California to Texas at the moment it’s pretty strong. I just finished reading Roth, Bard’s book a case against the fed. And he said that he was quoting somebody who can remember who it was, but there was this quote where they, the person said the government should only do three things, national defense enforcement of contracts and provision of physical safety.
So what do you think. I mean, we, in a more complex society where obviously governments have to do much more, or what do you think the limits of, what do you think government should do? And shouldn’t be doing
Well, that’s, that’s an interesting question. And that, that is something that, that people like you and me should be talking about a lot, because like I said, I think we’re going to have the chance to do it. So we better have a plan. Because you can’t just say, Oh, let’s just start talking about it for five years.
I I’ll tell you what I think. I think we’re going to, ideally we should make in the United States, we should make the constitution law. Again. We have to align what we do with what the document says, which means either we stop doing stuff that’s not in the constitution or we amend the constitution legally.
To do the stuff we want to do. And we don’t have stuff that’s in this gray area. I was like, Oh, we’re just doing it. Even though it says not to do it. And of all the things that we, now, we go down a list of what was in the constitution that we have to change. And I think there is a place for regulation. I think there’s a big problem in the U S because we’ve had all these regulatory agencies, which are just like, you know, a little.
Totalitarian governments in their, in their sphere, which is a problem. And there’s too much regulation. There’s all these regulatory problems, but we have to have, I think we have to have some regulation, right. And if you’re going to have some regulation, it’s either going to have to be at the federal level, the state level or local level.
Obviously, if you make it the state level, now you have 50 different regulations. Right. Regulatory frameworks for the United States. And you could say, Oh, well, they States can get together and unify, you know, have agreed to share the same regulation. So everything’s not so complicated in some places that probably makes sense.
But for a lot of things, it probably makes sense to have, uh, a official regulatory, federal role to be defined and to have some checks and balances and democratic and all the processes of government, not just to be this. Thing where bureaucrats run wild. So we’re going to have to do that, but, but all the other stuff, I think there’s basically two things.
One is private charity and social services. I mean, I see them kind of some kind of revival for that. And the other model that’s worked very well in the last 50 years is the Provident fund model, which is basically a mandatory pet contribution, like a payroll tax to a. Basically a bank account that you own that can be used for certain things.
So the classic examples are, you know, the so-called privatization, social security, your mandatory 401k, right. 10%. So instead of social security, you put 10% of your assets into this, essentially, a 401k that you own directly. And there’s a lot of advantages for that never will. And that has been discussed for a long time.
And many countries use that today. It’s very effective. And for healthcare, I got very excited about the Singaporean healthcare system and there is a book about it called the cure that works. By Sean Flynn, which just came out, I think last year, which is very good, which describes the Singapore health system, which is amazing.
It’s basically, and basically the gist of it is free market healthcare with a mandatory Provident fund. So a mandatory contribution to as health savings account that you can use the money to spend on healthcare and then, and some provision by the government for. People with low incomes. And so to make a long story short, the Singaporean system we spend in United States about 18% of GDP on healthcare.
Singapore’s spend about 5% of GDP on healthcare and get better results and have universal coverage and the Singaporean government to subsidize and support the lowest incomes. The most needy people spends about 1.5% of GDP of tax revenue on supporting on those support systems. Everyone else has a health savings account that the current balances of the health savings accounts privately owned.
Health savings accounts in Singapore is equivalent to five years of healthcare spending. So the average Singaporean has enough money in this account to foot all his bills for five years, which is amazing. Right? Like they don’t, they don’t, they don’t have this. Oh, what are we going to do about Medicare things?
Like, like I’m set for five years. Right. Amazing. It’s amazing. So yeah, States in the 19th century model was built on, so on personal responsibility, right. You got to save your own money. For health form, you got to save your money for retirement. You got to take care of yourself. Well, unfortunately there’s a large, always large portion of society that doesn’t do that very well, or they tried to, and they had bad luck or whatever.
And so this is basically mandatory self-responsibility and it it’s worked out to be a pretty good system in a lot of countries. And I think that is a model that’s nice. It’s not the, you know, the giant European socialist government pays for everything model, uh, which I think is, is bad idea going forward.
Hello, reading in your book, you made the point that as the magic formula is ignored, government grows rapidly and you sort of made the point that one of the smartest places to be as, as close to the government trough, as you can. I’ve been saying that to some friends recently, it’s extraordinary, like the proliferation in Australia of.
Uh, commissioners, you know, we have a new commission every week for something here in my, in the city here. They’ve just released these new, would you call them trash bins in America, garbage bins. And these new ones are just for green waste. Also just plant material, right? They’ve hired this whole, a bunch of people that walk around the streets, going through your green garbage trash can to make sure that you’ve only put green waste in there.
They’re actually lifted up the lead, looking inside goes cause that a piece of cardboard right there. Yeah. I just think it innovates entrepreneurship too, because there’s just, I think we might’ve asked States here they’ve added like 30,000 or 40,000 public sector employees in the last few, like two or three years.
And for me. I think it’s like that’s 40. I mean, we need some public servants, but that’s 40,000 people who won’t be building or creating or doing something else.
well, you, you, you remember the great stories about the Spain and the magic forum that I li I hope you appreciate it as much as I did. Cause you just get these stories of, you know, Spain had this trauma, this tremendous economic decline, and everyone was leaving for the new world where they. Basically, you know, had the government and go to side.
And during this time the population of Madrid, the capital went from 6,000 to 100,000. It was all, it was all just as the economy, let me got worse and worse and worse. The number of government parasites grew larger and larger and larger because I was the only thing. They, the only way they can make a living because make a living in the private industry.
Well, I remember driving home a few years ago and this always sticks in my mind because the Australian government had decided to focus on female octogenarian Islander perspectives on sea level change. So they had to find. Female Pacific Islanders in their eighties to get their perspectives is 80 year old women on sea level change.
So they flew them to Australia and the final cost of travel, um, stipend payments hotels was close to $500,000. And I came home and said to Karen, I said, I said the government is appropriating 45% of my wealth and we’re flying. Anyway. It was just funny. I mean, I hope they had a great conference and shared their perspective is that was the day that I kind of finally went.
The government is spending money on some things that are really just problematic now.
There’s there’s you know, people talk about, Oh, it’s government waste. It’s government waste. Well, it’s a waste from point of view from a taxpayer, but every dollar goes into someone’s pocket. Those $500,000, they went into hotels, they went into airlines, they went into public employees. They went all, all that $500,000.
When somewhere, except for the octogenarians who probably didn’t get it, Nicole, for their work, every one of those people are feeding at the public trough, right? What’s the difference between the hotel getting a a hundred thousand dollars per person payout, just sticking in their pocket and getting a hundred thousand per person payout.
And they gotta let some old ladies stay there for a week. What’s the difference? There’s nothing, right? It’s just, it’s graphed either way. All that. There’s no waste that money, not one dime was wasted. It all went into someone’s pockets.
well, I like the, I mean, it’s that old saying? Every Della finds a home, right? So is it essentially true? That is a stimulus payments crank up. I mean, those dollars have to be pushing equity
Basically, it’s hard to say. We w how, how does, how does it, how does that work? Right? What’s what’s the mechanism there. So, so that’s a little unclear, but when you in the United States, which mirrors other places, you had this funny situation where employment crashed employment, income crashed, but. Income spikes higher because everyone’s getting checks in the mail.
So if you actually look at people’s incomes during COVID, you know, March, April the COVID crisis, like blast PLAs off into space, which is fun, but it’s extremely expensive.
Here’s where this is heading sooner or later, the music stops. You get a currency devaluation leading to hyperinflation until the reestablishment of a new monetary system. And there’s just enormous amounts of suffering as that plays out. Is that what happens?
It doesn’t have to happen that way. We had pretty serious inflation in the seventies, but we didn’t have hyperinflation, but I have to say we, we definitely swirling the pot with some hyperinflationary ingredients here. Like I said, the, the thing that makes hyperinflation is when governments have to print the money to keep the lights on, because if you’re a government employee, you’re just going to make the decision to print the money rather than.
Triangle lights off until things get so crazy that, um, you know, how these things end, how do these things end? And it’s political. They end when they have to end. They end when there’s no choice in Germany. You know, why did the hyperinflation Germany end in November, 1923? And it’s very simple. The very it’s very, very simple reason that month the farmers harvested the crops.
They put the crops in the barn and they said, I’m not giving you the food, unless you give me something besides this paper crap. And there was no food in the cities. And three days there’s going to be civil war. And so then the government fixed it. They had a gold standard a week later, a week later, they had a gold standard.
I told Dan, he made all these excuses, right? Oh, we have to print money because of this. We have to do it. We’re not really doing what we’re doing. It’s MMTs whatever, you know, all these people are benefiting. No, you know, when there was no more food, there was no more food. They fixed it.
It’s funny. When, when you, when it’s likely that you’re going to get lynched, how creative you can become in a very short space of time, what is the essence of MMT for you? How, how, if you ever did dinner party with somebody, how do you explain it?
The essence of the argument, let’s put it this way is when people say, Oh, well you can print money and you get sane Ridge income. You get benefit from it and pay the government’s bills up to a certain point at a certain point is when his limitation is inflation, which is what the NMT are safe. Yes. We’ve been doing that for a hundred years.
That’s what the fed does. Right. The fed says, we’re going to make the money supply this big and we’re going to avoid inflation. Right. That’s what it does. What does day after day after day. And they have, they have conferences about it, you know, like, Oh, we’re gonna, you know, we want to have people. We want people to have enough money, but we wouldn’t want too much to be.
That would cause inflation. That’s what the fed does. All of the central banks do that. We already know that we’ve been doing that for a hundred years. What’s the difference for MMT, if you get past it, what, what the difference is is they link spending directly to government programs. So they say, well, we want X amount of money, trillion dollars, ah, for whatever we’re gonna, we’re gonna release student loan debt.
We’re going to have universal based case. We’re gonna have, we’re gonna fund this program. But once you say we’re going to fund this program, we are no longer limiting it by inflation because what are you going to do? We’re going to fund the program and then there’s inflation. We’re not going to fund the program.
Right. Is that how it works? You got just turn the lights off on the program. You can have whatever everyone gets free, steak dinner. And then, and then when the CPI is 3%, you turn, you turn a switch off. Is that really how your system is going to work? Well, obviously it’s not going to work that way because they’re just going to, they’re just going to put the money and fund the program.
That is the essence of empty.
I wanted to ask you too. Do you see some stability post, January for the U S do you see things calming there for at least a short duration?
No, I think I’m guessing, but I think that we are actually in an election issues. Sorry, maybe a bit of calm. Now I have some gut feel January being a bit of an inflection point, but I think January things might get, start to pick up in a big way. Well, we’ll just have to see what happens. It might be. Um, there’s a lot of talk coming out of Europe that they’re going to try to fix things in January because in Europe there’s a lot of governments that are kind of at the end of the rope there’s banks that have been covering goofing very sickly.
And as part of all that they’re talking about instituting, you know, sort of a cashless society, digital. PO thing and canceling McPaper tenancy, which makes sense that they do it all at once. Because if you’re going to default on the debt and you’re going to, you know, shut the banks, then via natural time to do that.
And so then the next step might be Europe that, you know, the, the first quarter, first half of 2021 might be the Europe drama and the U S will naturally obviously be affected by that. But if you look at what’s coming down the pike for it, 2021, there seems to be kind of a consensus growing, and it doesn’t really matter whether Biden or Trump is going to be president.
It seems to be an agreement that they’re going to run a deficit of about three and a half trillion dollars. And the fed is going to cover it with prank, press it, just you just hearing that from both sides. And you’re hearing that number like 3.6, 3.4 or something like that. And that I think will be a bridge too far.
If all that fully plays out, things are going to be off to the races. And what happens in countries is if you look at. For example, how did Germany get into hyperinflation? And they had been printing money to fund the debt fund. The government since 1914, much world war one was financed with the printing press, nothing particularly bad happened.
And what happened in Germany was basically a Versailles. And when the treaty of Versailles came through and it was all this horrible stuff, they looked at that and they said, we no longer have confidence that. We’re going to have stability. And the currency dropped 90%. They were printing money. They had been printing money for five years, but that was the point at which they said, you know what?
These, they don’t have a future. It’s when it’s, it’s, it’s that it’s that change that can really propel things. And I think there’s a risk of that happening in the next 12 months where people it’s already starting to happen. Right. You’re already starting to see people say, you know, Do I have to buy gold now, do I have, am am I going to buy Bitcoin?
Now? All these things right? Where they say, you know, did they bail out? It’s like, I’m bailing out. Yeah. I’m going to sell all my bonds for whatever I can get for them and get the heck out of here. Get the heck out. And that’s when you could see these huge moves and the government just stand by and say, it’s not us.
We’re not doing anything. Everything’s just blowing up. Everything’s just caught on fire. It’s speculator. This is what happened has, has happened in other countries so that you could, it could happen again.
So there’s a tipping point. The average person on the street finally realizes that that something’s not right.
Yeah, they basically just kind of change their behavior. What happened in the 1970s for example, was if you look at the statistics of money supply, they were growing the monetary money supply by about 6% a year, the entire decade, which was almost the same as the sixties and the fifties. If you look at this, this is the money part.
They’re almost the same. They’re actually like a little bit higher than a 1% higher than the 1560. You don’t, you can’t see it. You can’t see the seventies there. Well, what happened was in an inflationary environment, the demand for money goes down because it’s losing value, right? So you just find ways of making do with less money.
And so the value of the currency dropped by 90% over that decade. So we could see something like that, where. I call it a revulsion where they say, you know what? We have to change. We’re going to have to start changing our behavior. Let’s imagine our God with the coffee can, right. I talked about some guy with 10,000 bucks in coffee.
Can he thinks he’s being safe, right? Oh, I’ve got, you know, I’m being safe. I’m being I’m, I’m protecting myself from government default in bank failure with my $10,000 in coffee can and he’s he decides one day, you know what? If this $10,000 is not the way it go while he goes out and he buys, he takes $5,000.
He buys some gold coins. Well, now he’s got $5,000 less. That $5,000 got pushed into the economy. And if everyone does that, then they’ll be twice as much money as people want that kind of decision-making in that actual scenario, what would happen is the value of a dollar would crash. The value of gold will go up or once everyone’s trading them their cash for gold, what happens to the price of gold?
Right? Can I go up.
Do you want it? Do you want to take a stab at a feature gold price ballpark?
I’m, I’m kind of, I’m kind of kicking around some numbers that we will break 3000 next year and break 5,000 in 2022, which is roughly what happened in 73, 74. It’s something that’s happened already in us history is that kind of scale of move. And given the crazy things we’re doing now, compared to the actually quite modest things we you’re doing, then it seems entirely possible.
I think there’s potential. We could hit 10,000 before the end of 2021. I’m not, I think if maybe a 10% chance of that, but it’s definitely possible. Like I said, right. Uh, in, in 19, 19, the German, they had attend to one move in the, in the German Mark, which would be like $20,000 gold in a year. On the other hand, maybe we’re at, you know, maybe we finished the year with gold at, uh, 2000, in which case I’ll book a 10% gain and say, well, you know, maybe next year.
Uh, do you have any thoughts on, uh, the devil sit and the great reset stuff?
Yeah. I mean, I followed all that agenda 21 stuff for years and it was all pretty interesting. I think everyone has to say, well, isn’t now that our playbook, right? Because it’s all kind of, you know, when it’s all kind of coming down the line here, I’m not sure what you can do about it, but don’t take the vaccine as my advice.
Cause I I’ve only come across that relatively recently. It just seems so few people have really come across much of that yet.
Well, you guys in Australia are getting that agenda. 2030 stuff, pretty drawing these days, Canada too.
Yeah, well, I think we’ve just been surprised. Australians are pretty laid back, easy going. And I think there’s a strong case that we’ve rolled over way too quickly on some of what’s happened here is like I live in the national Capitol, but one of our big States here, Victoria, I mean, there were 5 million people effectively under house arrest for weeks and weeks and weeks.
And it. It just, it was extraordinary. I mean, we’ve had, we had massive bushfire as soon as the bushfires finished, we had COVID so it’s interesting. So that great reset stuff is essentially just more centralism. I mean, it’s, it’s the darker side of centralism,
I think it is straight out of the Bible. I think it’s a real thing as, as as many other people have said over the years, get your Bible playbook out, which is don’t get vaccinated. My take is if you have to drop out everything, do it for me. Right. I do all this stuff, but if I had to make a living as a, I don’t know, vegetable farmer rather than participate in this system, I would do that.
so I wanted to ask you what’s next, like you’ve done these three major books. What are you working on?
well, not any more books I’d like to write books, but it’s a public service. Put it that way, but right. Writing a book, it’s like swimming the English channel. Right. You could think about it for awhile, but when you start writing. You cannot stop until you’re done. At least that’s the way I am. Maybe, maybe some people can put it on hold.
Yeah. And, and like work a job and have it at the same time. But for me, you just have to keep going and you know, it could be three years. You don’t even really know when you start, how long it’s going to take of these three years of full-time work. And there’s nothing in this, in this planet. It’s worse than a book that’s half done.
Uh, so it’s like, it’s like swimming the English channel and it’s, and you’re, and you count it in years. My books tend to be pretty complicated. And if you notice, but there’s a lot of historical stuff in there. A lot of statistics. It’s not just let me just write my he’s like, you know, blogging, you know, let me write my opinion.
So yeah, nothing, uh, nothing particularly there. I’ve, I’ve, you know, kind of back in the wall street side of things, um, doing some investment related things for institutions, there’s also a lot of stuff on my website, new world, economics.com is my website.
Well, they’re going to have you back because I just feel that, you know, talking to you, we could just riff ours. So I’m going to link, I’m going to link out to, uh, to your website. I liked your recent post about the, what, what does Bitcoin have in common with? Uh, I’ll put a link to that one. People should read that.
I liked it. And, uh, listen, Nathan, I want to thank you for the incredible amount of sweat equity, blood, sweat, and tears. You put into those books from reading that first line about the high priest that of economics I was hooked, and I’ve really enjoyed what you’re doing. So thanks for the effort you put into them.
We’re going to send people to your blog to keep in touch, but for me personally, thanks so much for making time today.
It’s been a lot of fun. Thank you.
Doug Noland has been a student of credit bubbles for his entire professional life. His macro analysis is among the best in the business and his understanding of the current global situation is profound. In this special interview Doug shares his insights into current market distortions and what they suggest about the road ahead. He is the author of the widely read and respected blog, the Credit Bubble Bulletin.
Dan Oliver is the author of an important upcoming book called Golden Tears and is also the founder of the respected research firm and junior miner specialists, Myrmikan Capital. In this fascinating interview Dan takes us on a journey into the incredible history of King Louis XIV, the banking machinations of John Law, the establishment of the Mississippi Company and the resulting credit bubble and much more.