The Harsh Truth About Our Economic Future | John Rubino on the Dollar Crisis, Wealth Gap & More

29:22We've invaded three new countries in the past year, etc., etc., etc. And the dollar begins to plunge in value as everybody sees this. And then it dies. There's a concept called the crack-up boom in a school of thought called the Austrian School of Economics. And it says that with an unsound currency, which is what we have today, you eventually reach a point where a critical mass of people figure out that it's explicit government policy to make the currency worth less a little bit at a time year after year in order to make the debt manageable. And those people react to that the way you would think.

30:02They get rid of that currency as soon as they get some. You know, they get paid and they turn their paycheck into real stuff like farmland and gold and silver and, you know, that, etc. And that causes those things to spike in price, which is to say it causes the dollar to collapse in value and the system dies. You know, and we are very close to that right now. We're just a few basically lines of semantics away from people figuring that out. You know, just a couple more betrayals on the part of the aristocracy of a couple more groups of people. And we're there. So I think that's the coming decade for the financial world.

30:43And by implication, the political world and the geopolitical world. We've got chaos coming. And it's because we screwed up our currency on such a vast scale that people are just going to give up on it in the not too distant future. So what you're saying is really a very, very real thing that we, you know, there is no value to keeping the dollar today, that you basically are better off buying a car, even if the car depreciates a little bit, because you are eventually, you have very little trust that this currency will hold its value at all. That basically, if you keep your money in the bank today, the declared inflation is that you may lose, say, 5 % or whatever.

31:24But the reality is that because of all of the money that's being printed on top of that, that might not be measured yet, but that's coming back to you, you may be losing more. And I have to ask you a question from someone who hasn't lived in the U.S. From an outside the U.S. point of view, it becomes really, really clear that for a very long time, we paid for the U.S. lifestyle, right? Like the U.S. was basically having a free dinner on, you know, at the expense of all of us. And I think that's, again, something that most people don't understand, that by the U.S. printing money, forcing every country in the world to use the dollars to trade things like oil and so on, basically countries around the world would have to take that money that the U.S.

32:11printed, keep that as a reserve because it's the only way they can buy the commodities that they need. And as a result, all of that new additional dilution of the currency is actually born on the Chinese side or on the Middle Eastern side or whatever. Can you talk a little bit about that? Yeah, the dollar is the world's reserve currency. And that is what has allowed the U.S. to get away with what we've gotten away with, because everybody in the world needs dollars. That's your risk-free assets. So if you have some extra money, you can put it in local currency, but you don't necessarily trust your local government.

32:49But you put it in dollars, and you know the value will still be there going forward. At least that's how it's been perceived in the past. But that is starting to go away because, as you said, we have been able to get away with a lot of things because other people have been willing to take dollars. and that has allowed us to behave in ways that we wouldn't be able to behave otherwise. You can say it's mathematically correct that we borrow our military budget from China. That's such an interesting statement. It's true. It is true. To see it that way, it's such an interesting statement. Yeah, and from China's point of view, that's less and less of a good deal, right?

33:29Correct. Because that gets the US... You also import all the microchips that you need in your weapons from Taiwan. Yes. Yeah. Yeah. Interesting. Which, you know, that could be the start of World War III at some point here, if we figure out, you know, that that's our flashpoint. But what's happening around the world now is that other countries are starting to figure this out. See, it used to be that if you ran a trade surplus with the U.S., in other words, you gave us real stuff and we gave you dollars, that you would take those dollars, you would buy treasury bonds, which are government debts.

34:03So, in effect, you would lend that money back to the U.S. government, and you would hold those treasury bonds in your central bank foreign exchange reserves, which you use to back your currency. Well, that's suddenly not such a good deal for a lot of countries for two reasons. One is that we're clearly making the dollar less valuable year after year. So it's not necessarily a store of value anymore to hold treasury bonds. And the other is that holding treasury bonds has become kind of a political statement because the U.S. is using the dollar as a weapon. anybody that steps out of line from what the u.s empire tells them to do gets punished financially in some way will kick your banks out of the swift international bank settlement system or will put sanctions on your exporting industries and not let them sell their oil or uranium or whatever and a lot of countries who would like to if not become world powers but at least have some autonomy in their own neighborhood, find that very frustrating.

35:03So what's happening now is central banks around the world are selling their treasury bonds and buying gold because gold is a neutral asset. It's the old kind of money that we all used to have. And by buying gold, you're not necessarily making a statement that you're on one side or another in the coming global geopolitical crisis between the US, Russia, and China. So you can back your currency with something that will probably do much better than dollars going forward. And you don't have to choose a side in the coming World War III. So a lot of countries are doing that. They're buying gold and they're selling treasury bonds.

35:45And so that sounds an awful lot like the crack-up boom that I described before. When they get money, they dump their dollars and they buy something that is real that's going to hold its value better than currencies do so what happens to all of those dollars well that's the uh that's a very interesting question because they they in a lot a lot of cases come back to the u.s uh if somebody dumps treasury bonds somebody else is buying those treasury bonds for dollars and then maybe they get sent back to the u.s in exchange for real u.s assets yeah in other words, the money, let's say there's 10 trillion US dollars sloshing around in the world now.

36:25And if that comes back to the US, even$5 trillion of it into real stuff, you know, into Miami condos or Kansas farmland or oil wells in Texas or whatever, that pushes the price of all those things up, which is to say it pushes the value of the dollar down. So that's the big short-term risk for this trend out of treasury bonds and into gold is that it makes the dollar weaker, other things being equal. And it brings us closer to the point where we perceive that the dollar is no longer a store of value, and we just shouldn't be in it. And there's an organization called the BRICS Countries that is kind of leading the way here.

37:07BRICS stands for Brazil, Russia, India, China, and South Africa. And they're forming a separate monetary union that doesn't require the dollar, just totally bypasses the dollar for a lot of kinds of trade, and is threatening to set up a gold-backed currency that those countries will use for trade among themselves that'll be backed by gold. Therefore, it will be a sound currency that will hold its value. And it'll allow them to continue to dump their dollars on the open market. So that's, you know, it's a long term risk to the US, but it is a very real risk, because the BRICS countries, they own a lot of natural resources, they're powerful countries.

37:48Yeah, I mean, in a very interesting way, the real risk was that, you know, before the Ukraine-Russia war, if you wanted to buy oil and gas, even from Russia, you would have to pay in dollars. And so there was value to the dollar. Now, I think 92 % of all the trade between Russia and China is now done in their local currencies, which basically removes all of the, you know, the need for the US dollar there. And I think the idea that you're describing of the dollar coming back is actually really interesting for people to understand. So the way I normally try to explain it is, imagine if you walked into a supermarket and there were two bottles of Coke left and, you know, each of them is a dollar and someone walked in very thirsty, had$2 ready to buy them, when someone else walked in with$3 very thirsty, ready to buy them, the price of the two bottles have just immediately come up to three.

38:46It's as simple as that because he has the money, he has the need, and basically he will take the price up. And I think when you mention that, if you think of the entire U.S. economy and everything that's available for sale, let's say is a thousand dollars worth, there is a thousand dollars in the US competing for it. It remains at a thousand dollars. But if there is, you know, half of five hundred dollars coming back from outside to the US economy, now there is a thousand five hundred chasing everything that was originally worth a thousand, then everything would go up by 50%. Eventually those dollars have to be allocated.

39:23And I think that's actually very much what happened during the COVID time, where people were just given money, you know, in government support, if you want. And basically, that money had to find a place to land in, you know, whether that's real estate, eventually, whether that's stocks, eventually, and that basically kept things going higher. Yes, exactly. Right now, those dollars aren't here. They're not here trying to buy a lot of US stuff. But if they come back here, it increases the money supply in the US, which, like you said, more dollars chasing the same number of things, and that'll push the prices up.

39:59So yeah, that's very probably a process that's in train right now and will continue. And the COVID thing is also really important because most adults in the US had never experienced real inflation before. Two or 3 % inflation a year is beneath notice because there was inflation, but it was flowing into financial assets like houses and stocks, which aren't considered inflation in the US. That's considered to be a good thing instead of a bad thing. But in 2022, all that money we created to manage the pandemic lockdowns flowed into everything. It flowed into food and it flowed into rent. And all of a sudden, regular people got to experience double digit inflation.

40:46They saw their cost of living rise by 30 % in the space of just three or four years. So now we're a very different population in the US and in a lot of other places in the sense that we know inflation is a real thing. We know it's possible. We understand how it works. And we are terrified that we're going to have to go back to hoarding toilet paper from Costco and stuff like that and not being able to buy a used car that we need to get to work because there are no used cars on the lots for less than$25 ,000. That's scared a lot of people. So it kind of primed them for the other discoveries that they're going to make now as we figure out on every level that our government can't be trusted.

41:27And the biggest part of the government that can't be trusted is the financial system. So what do we do? And I have a Substack newsletter where the goal is to find actionable ideas for how to deal with this when it starts to happen because, you know, it looks inevitable, barring World War III or aliens landing or something like that. The financial crisis is going to flow from our past mistakes. It's pretty easy to lay out in terms of this happens, then this happens, then this happens. So the question is, how do you protect yourself and your family from something like that, that you've, you know, you've never had to think about before?

42:06These are new ideas. How do you prep? And what should you do? What skills should you acquire? What investments should you have? So it's suddenly interesting to a lot of people because they now accept that a crisis of that form is possible, you know, because they experienced something like that in 2022. So I definitely want to come to the question of, so what do we do about that? But I have one more question before we go there. It's sad for me to say this because I have tons of American friends and I, you know, did business in America for so long. But it's clear in my mind that what's happening is, as you rightly said, the rich society is unaffected by this even benefiting a little bit.

42:46And if that society collapses, they have global mobility. They don't really have an issue to stick to the U.S. other than maybe to diversify their assets outside the U.S. and their currency outside the U.S. dollar. But the typical American citizen today is really, really, really struggling. In my mind, I think the way BRICS is moving, and especially after the U.S. aggravates the entire world by putting sanctions on Russian money that basically gets everyone to distrust the idea that I can keep my money in US-related assets and that it's still my money, you know, makes everyone move away from those assets.

43:24As a matter of fact, not just governments, but, you know, a person like me, for example, where now Citibank blocks my account every two and a half weeks because some regulation of some sort is saying, ask him for more KYC, ask him for more KYC, which is in a way really, really understandable in a, you know, in a society where we need to keep financial systems safe. But the question of blocking my money makes it not my money, it makes it the bank's money, unless I comply to what the bank wants. And I think the whole world is waking up to this, that the big bully is not safe to be around anymore.

44:00And so I can easily see that the US citizen is going to suffer from that, that, you know, bricks will continue, that the US dollar will continue to devalue, that, you know, debt will be a very easy way for the US government to try and pay some of the interest by printing a trillion dollars more every year to pay the interest and so on. But my question is, how does that ricochet back to the world? So what happens to other societies that used to depend on the US economy or to trade with the US economy when that starts to happen in the US? Well, yeah, they have the problem that American citizens have, but writ large.

44:38In other words, what does India do or China or Taiwan, like you said? What do they do when they see that the financial system they've depended on for all these decades is no longer going to function the way that they're used to it functioning? And so they, in a very real sense, they have to prep in the same way that an individual American has to prep against the dollar crisis that's kind of inevitable now. And one of the things that they're already doing is buying a lot of gold. Central banks are aggressive buyers of gold right now, much more so than any time in the past. India, so far this year, their silver imports are eight times higher than in 2023.

45:23So they're doing that one thing. They're bringing in a lot of precious metals that whatever they do with them, they will tend to hold their value and they'll be a source of wealth. China is encouraging its citizens to buy gold. In, I think it's Korea, you can buy gold in vending machines in convenience stores. So a lot of the world is already doing that particular thing. And then weaning themselves off dollars or trade is another thing that's pretty obvious. If you're selling oil to China, then you take yuan instead of demanding dollars via an intermediate step now. Of course, that's That's not ideal, which is why there might be a gold-backed currency at some point that the BRICS countries use, so they don't have to trust the currencies of the dictatorships who are the main members of the BRICS coalition.

46:18But yeah, if you're in another country, weaning yourself off the need for dollars is a very quick, very simple way to protect yourself partially from what's coming. And you see it happening all around the world. So and here's what's interesting, though, or one of the interesting things is that that doesn't mean U.S. assets will fall in value. So it's possible that weaning yourself off the dollar might involve buying U.S. assets because the dollar. Yeah, because they will go up in dollar terms and that protects you against a devaluation of the dollar. So, you know, if you buy a San Francisco condo or something like that, if you're in Japan or China, it's an understandable asset that you own.

47:07You know, it's not it's not anything that you really have to go out of your way to figure out. You know how that works. So you just buy it, you leave it empty. And then, you know, the 10 years from now, you're going to come back to it. It's going to have some value. You know, it won't just evaporate. It may go down in real terms, in dollar terms, but it's still going to be a valuable asset with utility. And the U.S. is the least likely country to be invaded and blow up your condo. That's least likely to happen in the U.S. than anywhere else. So it makes sense. So in a weird kind of way, what's happening with the dollar actually attracts capital from the rest of the world.

47:45But isn't it possible that because there are no more buyers, because the economy is struggling in the U.S., that the price of that condo will go down? Yeah. Well, real estate is a cyclical asset. And it used to be that it would just stop going up during recessions. But in the last recession, in 2008, 2009, house prices tanked in the United States. and today's house prices are much higher than they were back during that bubble that real estate bubble so yeah i i think home prices in the u.s are due to fall but i think that what will probably be a deflationary recession of the next year or two just because you know you know we've taken on so much bad debt that we have to have a recession because consumers are out of money, everything's too expensive, consumer spending will go down, the economy will slow down, we'll have a recession, we'll have an equities bear market, all of that will happen.

48:41And it'll take real estate down with it. But coming out of that, the Fed will try to inflate its way out of the recession, and then we get even more inflation. And in that case, yeah, you know, a house or a condo in a border city or a coastal city in the US may not keep up with the depreciation of the dollar, but it will hold some of its value. It will remain an asset with some value. And for a lot of people, if you're trying to get your money out of Russia right now or Brazil or someplace like that, protecting some of your money is better than losing all of your money. Correct. Yeah. So in that sense, and that's basically what's been driving up the price of a lot of U.S.

49:25assets all along, and Canadian assets, by the way, is people around the world who are willing to take 30 % loss in real purchasing power in order to protect the other 70%. and they're buying real estate and and uh or condos and oil wells and things like that and that to them is a good deal you know because they made so much money with whatever kind of corruption they were engaging in in their home country that 70 percent of that they'll take it yeah so so when you when you give advice you normally say precious metals assets you know are better than currency in the coming time right but that assumes that someone already has money.

50:05There are so many people around the world and many listening to us right now who are barely making ends meet. So what advice would you have in the coming economy for someone who's not made it yet, who's not part of the baby boomer society that has the money and now is worried about not losing it? Yeah. 50 % of the US population is in the boat that you just described there where they don't have any real savings. So they're not going to go out and just buy$100 ,000 worth of gold or silver. That's completely beyond them. There are other things they can do though, because you basically, you know, look at how your grandparents lived and look at how resilient they probably were because they had a garden that maybe provided 20 or 30 % of their food.

50:54They knew some of the other farmers that they got milk and eggs and beef from. And so they had a network of people who would watch their back, and then they watched those people's backs. In other words, they were parts of communities that we've kind of gotten away from that now. Life has been so good in the US that we've taken on the idea that we can basically manage on our own. We can move to a new place. I live in a place with a lot of retirees, for instance, and a lot of them moved from their homes to buy a nice house in this area without necessarily knowing anybody. They were just, you know, they had money, they wanted to be in a pretty place, and they moved here.

51:37But, you know, let a gigantic financial crisis happen two years from now, and they are not going to have the kind of network that you need. So I think step number one is wherever you are, wherever you're starting from, try to become more of a part of the community than you are now. Step number two, look at the things that you could provide for yourself that you now buy at exorbitant prices. Food is one, repair services is another. If you can kind of sort of become a handyman, you're not only more self-sufficient, but you're in demand in your neighborhood. All of a sudden, you've got a part-time job there.

52:13If you can rewire a socket or if you can fix a car so it doesn't have to be into the deal or any number of things that our grandparents used to be able to do just because, duh, it's what you know how to do. We've gotten away from that. And there's a TV show called, it's a cartoon about a small town in Colorado. And in that small town, the people with college degrees and nice houses and everything didn't know how to fix their stuff. So they were always calling the handyman. And there weren't enough handymen in town to handle all the business. So prices of handyman type jobs started going up until they became the economic elite of that town.

52:55They became the rich guys that the handyman did. And that's an extreme example of what's coming. But we are coming to a point where being able to work with your hands and fix real things is a very in-demand profession. So, you know, learn how to fix things yourself. Back to basics. Yeah, advise your kids who are thinking about maybe getting a psych degree or a history degree or something like that. Advise them to become an electrician or a plumber or something like that, because those are the things that will hold their value going forward in terms of skill sets and careers. So they call something, there's a thing called skill stacking in employment advising.

53:38And that's a thing where you take what you can do right now and you add some skill to that. If you're a computer programmer, learn public speaking. If you're pretty much anything, learn some basic electrical stuff or plumbing or whatever. And that makes you more self-sufficient and better able to manage when things get tricky. Yeah, I think that's amazing, actually. You know, when I started to really look at the way the economy is going, I searched YouTube quite a bit for advice on how to survive the Great Depression. Right. And, you know, it's quite puzzling for me that the actual things that people did back then at that time were very much in line with what you're saying here.

54:21The way people survived the worst economic time in our modern history was they became closer to the community. They went back to basics, saved a little going into it. Whoever saved a little going into it hopefully turned it into something that they didn't appreciate, fared out better. And basically everyone went back to basics. It's like, I'll fix your car, but cook my kids a meal or whatever. And I think it's quite interesting. it's hopefully you will not get to a point where it's that dramatic or drastic but definitely definitely I think we need to wake up from the current lifestyle where everything is disposable thing that you want to to buy or shop is one click away you don't really think about that every one of those dollars every one of those habits every one of those skills will matter I think very much in the next few years yes absolutely the cartoon I was thinking of was South Park.

55:17That's the TV show about the hand. I can't believe I couldn't remember South Park. But yeah, if you look at our grandparents' lifestyle, that's a much more appropriate lifestyle for today than it has been for the past 50 years because things have been so easy. Growing up in the 1980s and 1990s was probably literally the best time in human history to grow up. In the US. In the US, yeah, because there were jobs that paid pretty well. Real estate was pretty cheap. Most investments hadn't started their multi-decade bull runs yet. And so everything was relatively easy. And we got the idea that that's how it would always be and that we didn't have to do any of these kind of grubby, messy things.

56:01We just pay somebody to take care of it all. In other words, we became kind of little mini aristocrats in our own way. You know, we have servants to handle this. It wasn't a live-in servant, but you know, the car mechanic fix the car for us. Maybe a maid comes in once a week and cleans the house and a handyman rewires whatever needs rewiring or does some drywall for us or whatever. So we had basically kind of Uber version of servants. You know, you call them up and they come over and they take care of stuff. Yeah. And we paid them what in today's terms is pretty good money to do that. And so we probably have to go back to the days when we take care of most of what we take care of.

56:40And also another thing we did was we kind of fragmented as families where back in our grandparents' day, maybe two generations or even three generations lived in the same house, which is incredibly economical when you think about it. You know, you're sharing one piece of real estate among eight people instead of two people. And I think we're going to have to go back to that again, in part because baby boomers now, a lot of them are kind of stuck in their McMansions because they've got 4 ,000 square foot, three-story houses, and they've got sore knees and sore hips, so they can't really get up and down.

57:14But they've got a 3 % mortgage on a house like that, which is super cheap. And where else are they going to? And anyhow, they aren't selling their houses the way demographically it usually plays out. Usually by the time a generation hits an average of 70 years old, they start dumping their houses on the market and it crashes real estate prices. But that's not happening. And one way that could play out is that the kids and the grandkids, instead of grandma and grandpa moving out, the kids and the grandkids move back in with them. And that's one way of solving the I can't buy a house problem for millennials and Gen Zers.

57:56And I think that's something that we're going to see on a vast scale. And it's not because we just wake up and think, oh, let's get us all into one house. I really want to live that way. Well, think of that because all of a sudden we can't afford our current lifestyles. And you'll lose your job or whatever, or your stock portfolio will tank, or lots of things will happen to make you much less rich than you think you are. Oh, pensions. We haven't talked about pensions yet. Public sector pensions are everywhere in the US, and people think that they're going to make X amount of money from their public sector pension, but they're not.

58:31Those pensions are going to go bust. And that's going to lead a lot of people to think, all right, well, let's get a couple generations together in this house and see if we can survive that way. So that's another thing that's coming and, you know, prepping, someone who's prepping for a crisis might want to get in front of that by thinking about it now. How bad do you think it will get, John? I mean, I have to say, it's slow-mo. My podcast has always been the point where you come for reflection and for thinking about things that would improve your mental health and make you feel better about life.

59:05I'm choosing to do this mini series that, you know, it's not what they told you, because I think it's time for people to really become aware and prepare for what is about to happen. But how bad is it? Like, how deep will we get into recession? How long will it take us? Is this 1929 again or is it 2008? It's definitely worse than 2008 because the numbers are so much bigger. We got ourselves out of the Great Recession in that decade by borrowing insane amounts of new money on top of the insane amounts of money that we borrowed before. So because the numbers are much bigger, the consequences have to be much bigger.

59:45But the specifics are tough because we're kind of at a choice. We're at a crossroads right now where we have two crises, two different kinds of crises. and we can't avoid any crisis, but we have to basically choose now which of these big crises we're going to have. And one, like you said, could be the 1930s. That's where we basically keep money creation under control. We allow interest rates to go up and that bankrupts a lot of people and causes a lot of the bad debt to blow up. And so we have a deflationary depression in which the debt is wiped out by default. In other words, lots of people go bankrupt, Their debt ceases to exist.

1:00:25They're impoverished. Their families are impoverished. And we have this brutal decade in which 90 % of the population feels as poor as they've ever felt and as hopeless as they've ever felt. So we have that. Or we try to inflate our way out of this, which is what a lot of economists seem to want to do now, where we just create as much new money as it takes to make today's debt less onerous. In other words, if the value of the dollar goes down, the dollars that you have to pay to cover that debt are less expensive, and it's a cheaper process for you to get out from under the debt. That will be a catastrophe.

1:01:02That'll be something like Weimar Germany in 1924 when currency just became worthless, you know, where you take a suitcase full of it to the grocery store, you burn it to heat your house or something. And I think that's what we want to do. That's not what we want to do, but those are the choices that our governments are making. Because as you mentioned right at the beginning of this talk, that's the easy way out. You know, it's easy for a politician who's going to retire in two years to generate a little extra inflation right now, then retire and leave the consequences, the much more serious consequences to their successors.

1:01:39So that's what we're doing right now. So I think we have a currency crisis. In other words, we have a time when the dollar loses so much of its value that it ceases to function in the way that a form of money has to function to be valid. And now that could lead to two things. One is, you know, that hyperinflation that I mentioned, the Weimar Germany scenario in which everybody who trusts the government is impoverished because their life savings just disappears. or we could have a monetary reset which is we just get rid of the old system and impose a new one like on some sunday night the government just announces that from now on the dollar is just a it's a name for one ten thousandth of an ounce of gold and uh it it will be henceforth convertible to gold in a government office anytime you want to and the money supply is going to be limited to the increase in the amount of gold that the US government has, which is to say that the money supply is going to be basically fixed.

1:02:39So no more inflation going forward, sound money. It's a system that works in the future, but at a cost of, again, impoverishing everybody who trusts the government. If you've got a bank account in dollars, and they make the dollar worth one-eighth of what it is today in real terms, in purchasing power terms, then you became a lot less rich than you thought you were, or you became dirt poor. And so we'd have to get through the political unrest that comes from that, because there's no way to do this painlessly. And I think a lot of people are going to be enraged by that. And so we have to somehow, some way get through the two years of incredible political unrest without some kind of a violent revolution for that to work.

1:03:29But if we can make it work, that's the least painful way of getting out from under this. You know, there is no pain-free way, but that way would be one that gives us a viable monetary system going forward. It's quite interesting what you just said, because I, you know, so I've seen this in my lifetime in many, many countries, you know, Argentina and Turkey, now in my home country, Egypt, where basically the currency is just completely, you know, devalued in a way that when the new Turkish lira comes out, it disrupts the economy, but then it really stabilizes the economy. I think the challenge with that is that now the Turkish lira is depreciating again so fast because the habits that created the original depreciation have not changed, right?

1:04:16And I think in a very interesting way, as you go at the core of it, perhaps the biggest reform is for the US government to stop borrowing, to actually stop having a budget deficit, to stop investing in the war machine that's killing everyone around the world, big bully, basically financing it from the money. I mean, the statement you said is just incredible, financing the war machine from the money made by China, right? And it's quite interesting because eventually the U.S., you know, if Trump gets elected, will go like, OK, and now we're going to have a war with China. No, you're not. You don't have the capabilities to do it if you if you go that way.

1:04:57And I think it's interesting that perhaps without fixing the underlying issue of that constant supply of money that is not backed with anything, you're really never going to get out of that hole, basically. Yeah. Well, see, that's one of the big issues in a monetary reset is it means that henceforth, you know, going forward, you have to live within your means. And in the US, that would mean that the average lifestyle gets cut by a third or more. You know, we would really have to scale back. And all your pensioners completely. Oh, totally. All the pensioners would see a big cut in their pensions, you know, Social Security and Medicare as well as teachers' union pensions and things like that.

1:05:41And we'd have to cut the military budget in half. So entitlements would have to be cut dramatically. The military empire would basically have to be scrapped. We'd have to, what do we have now? 180 military bases around the world, or I think it's 400 or 500, depending on whether it's just a presence or an actual base. But we'd have to call the soldiers home, you know? And we'd have to let Asia manage Asia and Europe manage Europe. And we would just have to pull back and be North America. And see, we have people in charge of the U.S. government for whom that is a fate worse than death, literally.

1:06:19Because they see themselves as running a global empire that's going to endure for a thousand years. They're called neocons in the U.S., neoconservatives. And they believe that the US, with 5 % of the world's population, should rule the other 95 % of the people in the world in perpetuity. That's just our birthright. And that whatever wars we have to fight now in order to make that happen are totally worth it. Because the long-term goal is so amazing. So, you know, got to deal with those guys somehow. Because they would not put up with elimination of the US global military empire. But financially, there's no way that it survives because we can't pay for it anymore without basically zeroing out Social Security, Medicare and all other pensions.

1:07:07That would be the mathematical equation that would get us to maintaining the global empire. And I don't think that's politically possible, obviously. Which candidate do you think can be elected with a campaign that says, I'm going to make you really suffer? and which candidate gets elected and then actually does any of what they say they were going to do at the end of the day the rich are dictating the agenda oh absolutely the donor class runs the country in the US and the only time this will happen any kind of a resolution like a monetary reset will happen when it's the least bad option on a list of extremely bad options so in other words if the peasants are metaphorically outside the gates of the castle, and there's a million of them, and they're thinking of French Revolution or Mussolini or something like that, you know, they're thinking things that would be much worse for you than to give up the power to create money out of thin air, that's when you'll do it.

1:08:11But not till then. I mean, who in their right mind would give up the power to create money out of thin air until their life depends on it? Can I suggest another alternative, which, you know, I have to say it pains my heart to say it, but it seems to me that everyone's abandoning the US other than the few glorified slaves that the US had for quite a bit in the West. It seems to me that BRICS is making a very, very powerful, very clear statement that your issues are going to be exported back to you. I mean, I don't know if the numbers are correct, but I think that 30 percent of the treasury purchases of China has moved out in the last year into gold.

1:08:52So basically there is a very gradual and, you know, unstoppable move away from supporting the US policy, supporting the US dollar standard, and basically creating a global economy in the global south that doesn't include the US. And honestly, it's if the US has constantly for the last 50 years been on a trade surplus that basically is funded by the rest of the world, eventually sort of the world will go like, yeah, you know, it's your problem now, deal with it. And in a very unusual way, it might seem to me that that might mean that the rest of the global economy, there is, you know, almost the inverse of the picture that we've seen for the last 50 years, where the US living standards are constantly going up, everyone else in the world is becoming poorer, other than perhaps China and a few other players.

1:09:43And that picture reverses, where everyone starts to catch up by trading among themselves while the U.S. really starts to pay back for the consequences of 15 years of wrong policies. Yeah, that's a real process that's kind of in place right now, because a lot of what's happening with the BRICS countries is they're doing things that the U.S. objects to, and they're just saying, well, you know, what are you going to do about it? Because look at Ukraine, We started this proxy war in Ukraine to try to weaken Russia. And Russia is now running a nice trade surplus by selling oil to the BRICS countries.

1:10:22And see, that would normally be something that would almost be an act of war from the point of view of the US. But are we going to declare war on China and India at the same time? That's a bridge too far, even for our neocons, I think. and so it's it's possible that u.s living standards fall as the rest of the world just kind of ignores it i mean i i think that's a ways away because the u.s financial markets are irreplaceable at the moment and the dollar remains an important currency for trade and everything so so we're talking longer term we're not talking at the next bricks meeting you know that this all happens no No, no, we're talking 10, 15 years.

1:11:02Yeah, but it is a trend in that direction. And I think it's possible that new leaders come into office in the U.S. and just do their best to make up with the rest of the world. That would be such a nice thing to say. Oh, wouldn't that be amazing? Honestly, with an external view of the U.S., out of the U.S., John, it's so interesting to us. Like, literally, a U.S. president could pick up the phone and talk to Putin and say, all right all right nato is not going to expand into ukraine anymore and the war would be over right and totally one phone call and it's mind-boggling for us how but i think you said it really well that the war machine is a very big economic incentive and so a lot of people are very interested to keep wars going to ship you know billions of dollars over because it's a business.

1:11:53Yeah. In a very real sense, it is a business. It's how politicians get reelected. It's how the CEOs of General Dynamic and Raytheon retire incredibly rich. And they see no reason to stop because they've either convinced themselves that it's the right thing to do, to continue trying to pacify the world, or they just understand that this is how they make money. this is their job. So yeah, I think that especially in terms of resources, some resources, the US has a big problem going forward because we don't have a monopoly on a lot of things that we need. So to the extent that the BRICS countries do have a monopoly on some of those things, that's a big issue for the US.

1:12:38But now the optimistic scenario for the US is that we've got an awful lot of geographic advantages, you know, two big oceans on either side of us and all the farmland in the world you could want in the U.S. and Canada, a young, hardworking workforce in Mexico. So if the U.S. had to stand alone or North America had to stand alone, we'd be fine. You know, we would definitely be okay. Yeah. And I think that might be the best way for this to play out if the rest of the world said listen just go back there and leave us alone so it's your stuff yeah yeah and we we would end up getting richer that way because if we didn't have to finance a trillion dollar a year military empire then our debt would be less onerous the currency would be stronger we'd be massively energy exporting you know at least independent and maybe exporting on a mass scale and you know we would be okay so we we have a much more attractive scenario in our hand.

1:13:40You know, it's just right there. Just a little bit of different political leadership. We could say, listen, we took on too much debt over the past 30 years. We can't afford to have an empire. So we're just going to pull back. You guys handle you and we'll handle us. And we're going to drill baby drill here. We're going to have energy exports that we're going to use to pay off our debts. And we're going to be the agricultural powerhouse of the world. And we're going to sell you cheap wheat as much as you want. We could do all that very easily. And that we're not doing it means there's some serious pathology at the top of the country.

1:14:20The aristocrats... That's such an optimistic scenario. Honestly, this is a wonderful scenario. I mean, in a very interesting way, I think a big chunk of the problem is financing the U.S. lifestyle, whether it's the politician's lifestyle or it's the military establishment's lifestyle, or even just the typical consumer's lifestyle. It's mind-boggling when you go to the U.S. and compare to the rest of the world. When I worked in California with Google X, I dated a wonderful lady in California. And one day we were having a conversation, and I don't know, spoke about finances somehow. And she said, and I quote, she said, you have no idea how poor I am.

1:15:05She said that as she unlocked her SUV and put her iPhone on the dashboard. And I'm like, you have no idea what poor is like really in all honesty. And by the way, she didn't, she wasn't exaggerating for the lifestyle of California, right? That was poor, that was considered poor. And you have to imagine that somewhere in the process of the next five, ten years, some of that will have to end somehow. A trillion dollars or a two trillion dollars military budget will have to end somehow. One of the real tragedies of today's America is that we don't get very much for all the money we're borrowing and for all the risks we take on around the world.

1:15:48We're not healthy. We are an extremely unhealthy culture. And part of that is the whole, you know, the aristocrats who are in charge of the food and pharmaceutical system have made it that way. They designed us to be fat, lazy, and stupid. So yeah, let's say in the US, you have a job that pays you$60 ,000 a year. You've got a car, you've got a small house, and you're safe. You don't have to worry about any kind of a rebel force coming over the border or anything like that. But you probably are on three different kinds of pharmaceuticals, two of which are antidepressants. You've got all kinds of incipient illnesses like heart disease and arthritis and things like that that you wouldn't have if you were living a healthy lifestyle.

1:16:40And you're going to die early and very expensively. So we're really not getting that much for our wealth. And that's why we have a politician, Robert Kennedy Jr. here who's running or was running for president and his catchphrase now is make America healthy again. And I think that that resonates with a lot of people or at least it should because because if we were a healthier society we would be a lot easier to get along with I think for the rest of the world. We'd be a lot less stupid than we are now. I would agree. I can talk to you for hours and I actually do. I mean in many ways I follow every part of content that that you put out on the sub stack, out on the YouTube.

1:17:23I love your brutal honesty. I just will have to say that. And I think your advice is incredibly valuable. I think people need to be awakened to the reality of what's happening and what we can do to take care of ourselves and others. I'm really, really grateful, John. Thank you so much for being here today. Thanks, Ma. I really appreciate that. And let me say one of the good things about it taking so long to play out, all this financial stuff, is that it's let a lot of very smart people develop a voice in the world. I agree. And so you're one of them. And I'm really glad you've got the show you've got.

1:18:00And I think you're doing a lot of good out there. Thank you so much. And for all of you listening, I really don't mean to scare you with what we're talking about. For most of us who have been studying this for a while, it's not that frightening anymore. Let's just put it this way. We knew this was coming. John has been talking about this for years. And, you know, for most who understand the economics of the world and the illusion of money, we know that this is coming. I think it's about time, even though my message of slow-mo has always been to really get you to focus on living a better life, on reflecting on things that matter.

1:18:36As I said before today, this is something that matters. And, you know, John was very, very generous with his advice. If you have money, turn it into either assets or precious metals. You know, currency itself might be a problem. If you have little, then perhaps try to save, try to change your lifestyle, develop a skill or a graft of some sort and definitely try to offset some of your spending. We may not have to go through any of that, even though most economists realize that we will. But developing this just keeps you safe if we do go through it. With that, I thank you all so much for giving me the opportunity to meet such incredible people, many of which are my heroes.

1:19:29and yeah I love you all for listening and I will see you next time