George Gammon's Biggest Economic Warnings for Investors

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1:51That's right. Right. And that was what Rothschild said. I care not who makes the rule as long as I control the money. Yeah. And I think that's part of their objective. And we hear them just explicitly talking about it. Yes. And this is the tsunami warning system that we're referring to. But probably more importantly, if we switch that chart of the inverted yield curve and what we can see is the two year treasury yield is higher than the 10 year. So just right off the bat, if I ask you, you know, Robert, if you're going to lend someone money for 30 years, are you going to charge them a higher or lower interest rate than if you lend them money for three weeks?

2:34Well, the answer is going to be a lot higher interest rate because there's a lot more risk. For the longer term. That's right. So when we see the short-term interest rates higher than the long-term interest rates, that's that, let's say the economic, that's the tsunami, the economic tsunami warning signal saying, hey, something is really, really wrong. And most likely we're going to have a significant recession or depression in the near future. Now, what does that mean? The whole global economy is very vulnerable. And this is what that yield curve is telling us. So what people really need to be cognizant of is when the two-year yield goes back down below the 10-year, because when the yield curve is no longer inverted, that's when we usually get the recession or economic depression.

3:29So people say, oh, good, the two-year went down below the 10-year, and everybody thinks that's good news. But that's the reinversion and all this stuff, but it's not good news for the average person. Yeah, that means that the tsunami is not 100 miles away. That means that the tsunami is 100 feet away. Right. And I went to school to be a merchant seaman, so I traveled the oceans. And these swells don't bother the ship. I went through several tsunamis and all this stuff at sea over the years I was out there. It didn't bother the ship, but when it hit land, boom. So explain this buoy system and all that stuff.

4:14Yeah, well, there's direct parallels between how advanced countries know if a tsunami is going to hit their shores and the actual yield curve predicting a financial tsunami. And so they have these buoys like 100 miles. I don't know how far they are, but let's say they're 200, 300 miles offshore. shore, these underwater buoys can feel or can sense that that pressure, that swell. Yeah, that's underneath the actual surface of the water. And they send a signal to satellites, which send them to the scientists. And the scientists can warn the people that are on the shore. Hey, you need to get out of Dodge.

4:54So the financial economic version of that system is the yield curve. So when the yield curve inverts, meaning the yield on the two years higher than the 10-year, that's the financial system warning us that, hey, guys, there's a big problem. And this financial tsunami is coming at the shore very, very quickly. Well, a central bank digital currency simply means that we all, all the average Joes and Janes in society, including the businesses and corporations, now have an account with the central bank. In our case, it would be the Federal Reserve. But isn't that Marxism, central banking? It's absolutely 100 % central planning.

5:42Because what happens now is the banking system is in charge of creating most of the new money. Now, it's a little bit different with these deficits and quantitative easing and whatnot. But usually it's the banking system. So if they keep that loan on their balance, if the bank continues to own the loan, they want to lend to someone who's going to pay them back. Right. Really? So hopefully they're going to lend it for productive purposes, meaning the majority of money that's being created is going to create more goods and services. Right. And that's why you don't have the inflation, even though the money supply increases.

6:17Now, what happens. It's called capitalism. Yeah, and that's why the free market works. And that's, by the way, why the free market creates deflation, not inflation. Exactly. Prices going down. Capitalism actually brings prices down because you can't compete otherwise. Yeah, which brings the standard of living for the poor and middle class up. Yes, but they're teaching Marxism in school. That was my book, Capitalist Manifesto. That whole thing is so backwards run by school teachers. Oh, my God. Yeah, exactly. So if we move into the system with a central bank digital currency, then all the bank accounts go to the Fed.

6:51And then the Fed determines who gets the loan and why. And the big key there is the Fed doesn't have a profit and loss. They can lose money. So where a bank has to lend productively, the Fed can lend in a way that isn't productive. They can lend to whomever they want. They don't have to worry about being paid back. So that's centrally controlled money supply debt creation. And that, to your point, is Marxism. But it's also massive control. It's Orwell. Big Brother is watching. Yeah. They can tell exactly where you're spending your money, what are you spending on, and where is it? Yeah. So going back to the IMF and this gal that's in charge that was speaking at Davos, she was saying how we need a central bank digital currency and that the global governments need to come together.

7:40and of course the IMF would manage this in the World Economic Forum, but they need to come together to create a solution for cross-border payments. This is how she's selling it, is that all these poor people have to pay Western Union, you know, 20 % fee or whatever. And she's right, but she doesn't care about that. She just cares about the solution, which is the global government's coming together with this payment system for cross-border that's seamless and free, but of course we're using a central bank digital currency And then the reserve asset becomes the SDR, which is the currency of the IMF.

8:14So then they have control over the money supply. And it's not the system we have now with the United States having the global reserve asset or the global reserve currency and the banking system creating that currency globally. You know, if we've got nominal GDP at 5 % and the government or the Fed is telling us that real GDP is 2%, that's because they're adjusting 3 % for inflation. But what happens if that number that they're adjusting by is artificially low, that means that GDP is artificially high. So if you go back the last 10 years and say, boy, you know, this economic boom or this recovery that I've been hearing about on the news, it doesn't feel like it's been a recovery.

9:02I mean, I hear everyone talking about it, but it sure doesn't feel like it to me. That's because if you actually adjusted for the real rate of inflation, real GDP might have been zero, if not negative, over the last 10 years or so. What is the repo market? Yeah, so let's dive into that. I'm going to make it super simple. So really what happens, we have all these banks in the United States, hedge funds, financial institutions, and they need cash. They have a lot of assets. Let's say they've got a big piece of land, but in order to make payroll or rent, they can't sell that land quickly. So they have to come up with the cash.

9:39So they'll use that land as collateral, and I'm just using this as an example. They'll use that as collateral to get the cash they need to fund whatever it is overnight or a term repo. maybe 20 days, 30 days. So these are repo agreements or repurchase agreements. And I could get into the technical mumbo-jumbo, but basically all it is is it's just a quick loan between two parties. So if Robert has a truck, let's say, and he needs$1 ,000 to pay some bills, well, I've got the$1 ,000, I'll give it to Robert, he gives me the truck as collateral. We trade back the next day, and Robert gives me a little bit of a premium for that loan.

10:21That's what a repo is or a repurchase agreement. It's just done between all these banks, financial institutions, and hedge funds. So let me say something. So one of the reasons we got out was we could see the repo market is very simply banks get in trouble too. They come up short of cash like all of us, except when they come up short of cash, it's in the billions. Yeah. Well, Robert, that's why Lehman went bust. Yes. Because they couldn't access the repo market because no one wanted the counterparty risk. Right. And that's how you know. Well, going back to September 17th in the repo market, we saw interest rates spike almost up to 10%, which was totally unprecedented.

11:01Usually it follows the Fed funds, which was caught 1%, 2 % right around there. So if you see this happening, you know that there's something wrong underneath the water. You're seeing the tip of the iceberg. You're seeing the top of that wave. But you know underneath there's a lot of problems. And that's what prompted Robert to take some action. So I think what I want to stress, and I'll explain this just momentarily, but what I really want to stress to the viewer is that if you're able to just start to understand the macroeconomic picture, and it doesn't need to be complex. The reason you think it's complex is because all these economists and academics, They use all this jargon and technical terms.

11:46But if you just break it down into simple English, it's actually very easy for people to understand. And if they understand it, they're going to be able to make much better decisions for themselves and their family in the future for their finances. So we were talking about the repo market as an example. And, Robert, you have that great picture of the oil rig and all the plumbing going back and forth. That's basically the dollar funding market. So how it applies to the average Joe and Jane. Let's just say that you've been saving your money. You've been working hard. You've been doing all the right things.

12:23You've got a little nest egg saved up. And you go to the bank. You're like, oh, my gosh, they're only giving me 0.5 interest or zero or who knows what it is. You can't even see the interest rates. They're so small nowadays. So you say, okay, where can I go to get a little bit higher rate of return? But I still want to be safe. It's got to be safe. So then you might look at a product like a money market mutual fund or a money market fund. And then you look at this, you say, well, that's safe. All my buddies are doing it. It's just like a bank account. But I get maybe a 1.5 % return. Well, what the average person doesn't realize is they're taking exponentially more risk just to get that 1 % additional return.

13:07So how is that? Because the way that the money market mutual fund gets the additional return is they take your hard-earned savings and money and they put it into the repo market. Or they put it into the commercial paper market, which is basically funding for corporations, the same type of thing. So the question then becomes that person that's just watching Monday night football and just enjoying life, just with the white picket fence, the two kids, the golden retriever, they don't care about what's going on with the plumbing. They don't care about the dollar swaps. But does that person really want to lend their hard-earned savings to Deutsche Bank, to HSBC, you know, some of these banks that could be crumbling as we speak, or to put things into other terms like more America-centric corporate terms?

13:59Would that individual want their money being lent to American Airlines right now or Boeing right now, where every single time you turn on CNBC or the TV, you see that they're asking for another bailout because they're about to go bust? Long story short, right now we're at the top of a 75 to 100 year long term debt cycle. So the only way from here is down. And Robert, you call this in a lot of your books. and you kind of predicted this and had the foresight to see this coming. But when you get to the top of one of these debt cycles, the only thing the government can do, well, there's four ways out of it.

14:37Number one, they can choose austerity, which very few governments do, and that's just tightening the belt, spending less. Everyone feels the pain. Think of the deflation or depression we have in the 1930s. Or they restructure the debt. Well, it's not likely we're going to do that with China. It's not likely we're going to do that with the big banks because they're the creditors. or they could just default, say, hey, we're not paying you. Or what most governments do is they choose money printing. This is creating inflation to bail out all the people who have the debt, whether it's governments, whether it's individuals.

15:14So once you get debt to a certain level, you've got to, well, you don't have to, but most governments choose to inflate it away. So what does that mean for the average person? Well, if the government is going to try to create inflation, meaning the cost of goods and services going up, what you want to do is you want to make sure that you're positioned for that. So as an example, if you just own your own home, you've got to make sure that you've got a 30-year fixed-rate mortgage. Because if they try to create inflation, if interest rates go up, then your interest rate is going to go up unless it's fixed.

15:53And what happens when you're a debtor and they create inflation, you're going to have the opportunity to pay the loan back, your mortgage, with cheaper devalued dollars. So the way they can think about that is if they borrow, let's say,$100 ,000, the rate of interest means that they're paying the bank back with increased purchasing power because you've got principal plus interest. So what happens in inflation, though, is inflation allows the borrower to pay the debt back with less purchasing power. So if your rate of interest, let's say, is 1 % or 3%, we'll call it, but if inflation goes up to 5%, 6%, the delta between those two is a transfer of purchasing power from the bank to the individual homeowner.

16:45And I think a lot of people listening to this probably have a mortgage, if not on a rental property, on their own home. I think that's the very first thing they can do to be proactive. Also, gold, silver, Bitcoin, you talk about that all the time. And I could continue to go on, but that's where I'd start.

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19:19What does 84 mean to you? Because that's a really interesting book, you know. Well, it's pretty much what we're seeing play out right in front of our own eyes. I mean, it was supposed to be fiction. But in my opinion, this is the objective of these Davos types, you know, the global elite. And I don't think it's a conspiracy theory. I think they're coming right out and saying that, hey, we want the world to consume less energy. We want to reduce the population, the birth rate, they'll say. And we want to, you know, we want power and control because it's in your best interest. Look at what the WHO came out with, this health treaty.

19:58Did you see that? The World Health Organization. Yeah, they came out with this opinion. I don't know if it was this proposal for a treaty where basically they control in the future every country's position on lockdowns, on mask wearing, on all of these things that we've seen play out in 2020 and 2021. The WHO wants to be in charge of all of that. So all these countries sign treaties that say, yes, we're giving our health sovereignty over to you, global elite. But that's the World Health Organization, the World Bank. Everything is world. Yeah. There's no sovereign. Yeah, yeah. You know, no national world.

20:39That's right. Well, there's – so you've got these two opposing forces going on right now. Most of us in the real economy, and I think the people listening to this show, they want decentralization. They want control of their own destiny. They want privacy also. And privacy. A few words like that. And they want it for their children. Right. Where these Davos types, they want the opposite. They want complete centralization because they think that all of us are inferior. Stupid, dumb rubes. And, you know, we're only going to make things worse. So we need to give them all of our freedoms, all of our liberties.

21:19They need to have complete control to be able to micromanage our life. And that's the only way that, you know, their minds that we're going to survive. Another thing, too, the thing about, you know, like reason we're like macro is history does repeat. You know, as Jim Rogers says, one thing history teaches you that people don't learn from history. Yeah. And so when I read Anne Ran and Atlas Shrugged, you know, so where did John Galt go hiding? I went, do I have to hide? I mean, I was, you know, she escaped from Russia. Yeah, right. So when I read that book, where is John Galt hiding? I went looking for a place to hide.

21:57You look at books like 1984 and Atlas Shrugged, and you see, my gosh, how on earth could they have seen this coming? These were supposed to be fictional books, but they predicted the future and what we're living through now. I think it's just because, to your earlier point, history repeats. Or if it doesn't repeat exactly, it rhymes. I mean, I was doing a lot of research just over the last couple days on World War I. and how World War I started. And it is eerily similar to what we're seeing. Well, that was World War II as far as the hyperinflation. But World War I was really the Duke. It was reparations from World War I that set up – I mean that's what the – it was a chain – go ahead, keep going.

22:39Yeah, but the Duke gets shot in wherever he was, in Slovenia or something like that. I can't recall where he was. But basically, then you have the two groups, you know, Austria and Hungary and then the other group. You have all of these larger countries that back one of the smaller countries that hate each other. And, you know, then the world gets kind of separated into two groups and then they go to war. And you see the same thing happening today with Russia. You've got larger countries that are siding with them, and then you've got other countries that are siding with the West. So you have two economies, especially Ukraine, that are relatively small.

23:25Now, they're wildly important because they provide a lot of the food and energy for the world. I'm not saying they're not important. Ukraine is the breadbasket to so many countries throughout the world. Yeah, right. You've got natural gas. You've got potash. You've got fertilizer. You've got lumber. You've got a lot of stuff there in Russia and Ukraine. But my point is you've got from a standpoint of GDP, you've got two countries that are relatively small compared to the Japan's and the China's and the United States. But yet they're in this conflict. You know, everyone, all these huge countries that do have, you know, a lot of economic power and huge militaries are picking sides.

24:06And you can see it escalate and it just feels the same. Obviously, I hope it's not. and there are no certainties, there are only probabilities. But the point there is if you look at history like World War I, World War II, all of these wars, they usually start the same way. And that's why I always use the term free market capitalism, not just capitalism. Because people like to argue and say, well, look at what happened during the GFC. That was a result of the global financial crisis. That was a result of capitalism gone amok. And look, you know, the Fed came in and bailed out all these corporations.

24:47That's what capitalism does. I said, no, no, no. That has nothing to do with capitalism. Amen. And that has nothing to do with a free market. So if you look at things in terms of a free market, which is really what capitalism is, that does not involve bailouts. Correct. That involves actually letting businesses go bust. That's right. Yeah. So then those people who are prudent can come in, buy the assets, and that benefits society at large moving forward. Correct. They were too big to fail, which is communism. Yeah. And so that's why the Fed is the third central bank, but it's not really a central bank.

25:21It's a Marxist organization. Yeah. And I would say it's not just communism, but it's kind of this blend of corporatism. And so when I hear the word corporatism, the first thing that comes to my mind is what we saw in 2020, especially with the lockdowns. You got it. Right? Because we basically told small and mid-sized businesses that you're no longer open for business. You can't do – you're bust. That's exactly what he's saying in this book. Yeah, so that consolidates all of the demand to these huge megacorporations. Megacorporations. So then is it easier if you're someone, let's just say that's a Marxist, that's trying to control the means of production.

26:05Is it easier to control the means of production when all goods and services are produced by 100 megacorporations or millions and millions and millions of small businesses? Correct. Obviously, those 100 megacorporations. So that would lead one to ask the question, well, was what we saw in 2020. The start of communism. That's right. That's right. So most people don't realize, but you do because you've brought up this book, which I think everyone should read to know the enemy, is the fact that Marx really wasn't anti-capitalist to a certain extent. He saw the value in the industrialists and the capitalists of their time because he knew that they were very good at building stuff.