RPF0708-Understanding_the_Rough_Economic_Fiscal__Monetary_Waters

00:00:00.000 | ♪

00:00:05.440 | California's top casino and entertainment destination

00:00:08.440 | is now your California to Vegas connection.

00:00:11.940 | Play at Yamaha Resort and Casino at San Manuel

00:00:14.480 | to earn points, rewards, and complimentary experiences

00:00:17.680 | for the iconic Palms Casino Resort in Las Vegas.

00:00:21.120 | ♪

00:00:23.660 | Two destinations, one loyalty card.

00:00:26.160 | Visit yamaha.com/palms to discover more.

00:00:30.620 | Welcome to Radical Personal Finance,

00:00:31.860 | a show dedicated to providing you with the knowledge,

00:00:33.620 | skills, insight, and encouragement you need

00:00:35.660 | to live a rich and meaningful life now,

00:00:37.860 | while building a plan for financial freedom

00:00:39.300 | in 10 years or less.

00:00:40.860 | My name is Joshua, I'm your host,

00:00:42.000 | and today we're gonna talk about

00:00:43.600 | the rough economic, fiscal, and monetary waters ahead.

00:00:48.600 | Wish I had a more positive topic,

00:00:52.740 | but that's what we gotta deal with today.

00:00:55.040 | Thankfully, I will share with you

00:00:56.280 | that I have arrived back home from my travels,

00:00:58.680 | and so I did make it home to be back with my family,

00:01:01.280 | and certainly I cut it pretty close.

00:01:03.220 | I don't know if I was wise to take a trip

00:01:06.220 | right in the middle of the chaos that I saw coming or not.

00:01:09.220 | I thought I had enough time,

00:01:10.220 | and I thankfully did have enough time,

00:01:11.720 | but it was certainly an interesting,

00:01:15.060 | caused me to feel exposed to be away from the family

00:01:17.200 | and not sure with all the increasing travel restrictions

00:01:19.340 | whether I was gonna make it home or not.

00:01:20.600 | So I did make it home,

00:01:22.000 | and I've been busy, busy, busy the last couple of days

00:01:25.500 | doing kind of some next step preparations,

00:01:27.940 | which I won't talk too much about in this show,

00:01:29.740 | but I've just been busy getting ready

00:01:31.420 | for the next step ahead.

00:01:33.520 | Today I need to work very quickly,

00:01:34.880 | and so I'm gonna talk primarily about

00:01:36.560 | the economic, fiscal, and monetary path ahead,

00:01:40.480 | but we do of course need to understand first

00:01:43.120 | where we are with the current event.

00:01:46.020 | Obviously, the event that is causing

00:01:48.460 | this economic difficulty is the virus,

00:01:52.160 | the viral pandemic, COVID-19,

00:01:54.400 | as it is expanding all across the world.

00:01:57.080 | Now, the good news is you can be confident

00:02:00.000 | that at some point in time this virus will end,

00:02:03.680 | this pandemic will end.

00:02:06.040 | The unknown is how it will end and how long it will take.

00:02:10.080 | Certainly at this point I would say at minimum

00:02:12.460 | we're looking at a couple of months

00:02:14.220 | of this kind of hardcore lockdown.

00:02:17.900 | We can see if the data from China is reliable,

00:02:23.800 | and if the data from South Korea,

00:02:25.940 | which is where we have better data

00:02:27.540 | that's more reliable than the Chinese,

00:02:29.600 | if the data that we're getting is reliable,

00:02:31.540 | we can see that there is a path

00:02:33.200 | to stopping the massive proliferation and explosion

00:02:37.240 | of this particular disease,

00:02:38.640 | and that path involves severe social isolation.

00:02:41.920 | That is the most reliable path

00:02:43.880 | to stop the spread of a viral pandemic,

00:02:46.580 | which is why social isolation

00:02:49.000 | and social distancing is so important.

00:02:51.760 | At this point, my family and I,

00:02:53.460 | we are locked down in our compound here.

00:02:56.120 | We're not going anywhere, we're not doing anything.

00:03:00.240 | I may still go to the farmer's market and get groceries.

00:03:04.300 | That's where we get the majority of our groceries

00:03:05.880 | from the farmer's market.

00:03:07.140 | That seems like a modest risk activity.

00:03:10.340 | It's an outside market, it's not inside of closed space,

00:03:13.840 | so I really don't wanna start eating storage food

00:03:15.680 | if I don't have to, but we've canceled everything else,

00:03:18.820 | and so we are at home, and hundreds of millions of people

00:03:22.360 | all around the world are doing exactly the same thing.

00:03:25.000 | They're just simply sitting at home.

00:03:26.860 | Now, this certainly feels silly.

00:03:28.660 | It feels unnecessary because you look down and you say,

00:03:31.400 | okay, so there's 150 or 180,000 people sick

00:03:34.940 | that we know of for sure,

00:03:36.240 | and there's some tens of thousands of people who are severe.

00:03:40.100 | It seems silly to lock down the lives

00:03:41.820 | of billions of people, and yet we know

00:03:44.540 | that this is necessary in order

00:03:46.780 | to stop the spread of the virus.

00:03:49.520 | The major risk factor that is different

00:03:51.860 | from past pandemics is simply the mobility

00:03:56.020 | of people throughout the world.

00:03:57.700 | If we were to go back to the 1600s

00:03:59.420 | or go back to World War I, the great Spanish flu,

00:04:02.860 | people moved around the world, but fairly slowly,

00:04:06.300 | even though people were moving around the world a lot

00:04:10.300 | during the 1918 Spanish flu,

00:04:11.700 | it was still generally at the speed of a ship

00:04:13.540 | or generally at the speed of a train.

00:04:16.220 | Today, there's such a tremendous flow of people

00:04:18.920 | via airplane all around the world

00:04:21.220 | that the whole world has to respond at once,

00:04:23.780 | and so that's what we're seeing right now.

00:04:25.580 | The good news is this works, this works.

00:04:28.940 | If I'm not sick, right, if I didn't get sick in my travels,

00:04:31.420 | hopefully I didn't, but that's another reason

00:04:33.860 | why we are in quarantine, 'cause if I got sick

00:04:36.140 | in an airplane or in the airport,

00:04:40.000 | I don't wanna pass it along to any of my neighbors,

00:04:42.280 | but if I'm not sick and I just simply sit here in my house

00:04:45.900 | and do nothing that brings me into physical contact

00:04:49.320 | with another human being, I'm not going to get sick.

00:04:51.920 | Now, how long that's practical depends, right?

00:04:56.380 | I can certainly do that for months.

00:04:57.940 | I can sit here and I can work, and I can,

00:05:01.220 | we have enough food, we can stay here for months.

00:05:03.060 | I don't have to go anywhere,

00:05:04.420 | and so many people can do that as well,

00:05:07.780 | and the risk is relatively modest.

00:05:10.220 | Even if you live in a big city and you just leave the house

00:05:12.880 | to go to the grocery store, you'll see grocery stores

00:05:15.740 | continuing to expand their limited hours.

00:05:19.520 | You'll see grocery stores continuing to limit

00:05:21.800 | the number of shoppers at one time.

00:05:24.240 | This is both to, in addition to their rationing,

00:05:27.180 | which they're doing right now,

00:05:28.120 | this is to extend the supplies of food.

00:05:30.900 | It's also to minimize the amount of human contact.

00:05:34.500 | I'm thrilled to see grocery stores coming out with policies

00:05:36.760 | such as reserving their first hour of open business

00:05:40.200 | to high-risk individuals.

00:05:42.040 | They can go through the store at night,

00:05:43.400 | they can restock the shelves with the supply

00:05:45.400 | that they have available,

00:05:46.700 | they can clean and disinfect everything,

00:05:48.500 | disinfect the carts, clean everything,

00:05:51.300 | and then allow elderly people or high-risk individuals in

00:05:53.920 | to shop when everything is clean.

00:05:56.560 | I think that's wonderful,

00:05:57.840 | and I think you'll see more and more things

00:05:59.660 | like that happening.

00:06:01.040 | So this social distancing strategy works.

00:06:04.160 | It's basically the only strategy

00:06:05.880 | that's pretty much guaranteed.

00:06:08.660 | The problem and the question comes down to how does it end?

00:06:11.820 | There are a few ways that it could end.

00:06:13.840 | It can end by just simply the health officials

00:06:18.840 | being able to get on top of the individual cases,

00:06:24.380 | the people who are actually infected.

00:06:26.540 | This comes if you have widespread testing

00:06:28.620 | and the people have confidence in the test results,

00:06:31.080 | then the social distancing can be enacted simply

00:06:34.980 | through just quarantining the infected persons,

00:06:39.500 | and many other people can go back to their lives.

00:06:41.540 | You see, that's what has happened in China.

00:06:43.960 | Now that China has done extensive testing,

00:06:46.560 | they've instituted a mobile application using the data

00:06:51.280 | that they have on all of their individual citizens,

00:06:53.900 | demonstrating high-risk versus low-risk individuals.

00:06:56.940 | And so if you're gonna go and get on the train in China,

00:06:58.740 | you have to show your mobile app

00:06:59.880 | that's tracking your every move,

00:07:01.420 | and it says, "Yes, I'm low-risk,

00:07:02.660 | "and I can go on the train."

00:07:03.720 | That's why they're getting life back to productivity

00:07:07.020 | and back to generating some economic activity,

00:07:09.520 | back to some semblance of normal.

00:07:11.540 | Now, will that happen in the United States of America?

00:07:15.140 | Maybe, have a hard time seeing it.

00:07:18.220 | Will that happen in India?

00:07:20.640 | Have a hard time seeing it.

00:07:23.340 | Will that happen in Nigeria?

00:07:25.740 | I have a hard time seeing it.

00:07:27.060 | Will that happen in Mexico, in Canada?

00:07:29.280 | It's a little bit different.

00:07:30.880 | China has inoculated its citizens to be comfortable

00:07:35.140 | with government oversight of everything.

00:07:37.540 | For years now, they've been running the social credit score.

00:07:41.000 | And so individual citizens in China

00:07:43.440 | are used to having every detail of their life

00:07:45.560 | managed by the government.

00:07:47.520 | I'm not putting an app on my phone.

00:07:49.760 | I don't care what public health benefit there is.

00:07:53.840 | I'm just not gonna do it.

00:07:55.440 | I don't trust any government official that much,

00:07:58.120 | and I think that I'm well-warranted in that suspicion.

00:08:01.240 | And so you even see the US government

00:08:03.480 | trying to get more data.

00:08:04.760 | If they do that, I won't have a phone anymore.

00:08:08.420 | My phones will be sitting in a Faraday bag,

00:08:10.260 | and I won't even be touching them.

00:08:12.020 | I just simply do not trust that.

00:08:13.620 | I think we have far too much historical evidence

00:08:16.600 | of how that data is exploited.

00:08:18.980 | And in the past, it was,

00:08:21.000 | when we see the destruction that happened in the past,

00:08:23.580 | you think back to Germany prior to World War II,

00:08:26.980 | and how the development, IBM and the computer systems

00:08:30.940 | that they developed and the census that they accomplished,

00:08:33.860 | and how that was used to almost exterminate

00:08:38.160 | an entire religious and ethnic group of people.

00:08:41.240 | It's just the historic,

00:08:44.240 | I'm much more fearful of that than I am of a virus.

00:08:47.080 | If you think back to how the census data

00:08:49.640 | was used in the United States

00:08:51.260 | to lock up the Japanese during World War II,

00:08:55.300 | it's just, those things are so obvious that it's,

00:09:00.300 | to me, I think it's absolutely foolhardy

00:09:03.640 | to participate in any kind of system like that.

00:09:06.760 | Even though the Chinese are currently using it

00:09:09.020 | to stem the flood of the virus,

00:09:11.520 | I don't deny that it can be useful for that,

00:09:17.920 | but it's, they've also been systematically locking up

00:09:22.440 | and exterminating religious minorities,

00:09:24.780 | Christians, Muslims,

00:09:26.200 | and they've been doing that for decades.

00:09:27.880 | It's just, it's horrific.

00:09:29.480 | And so, if you care about human rights,

00:09:32.500 | I don't see how you ever give any government

00:09:34.960 | that kind of power.

00:09:36.060 | So, I'm not gonna be participating in those kinds of things.

00:09:39.060 | I don't even participate in a census.

00:09:40.880 | So, if you're gonna participate in a census,

00:09:42.520 | the only thing you should do is simply,

00:09:44.200 | the only thing that is legally required

00:09:46.880 | is you say, this is the address

00:09:48.520 | and this is the number of persons involved.

00:09:50.320 | That is it.

00:09:51.160 | That's all the information

00:09:52.480 | that your government needs from you.

00:09:54.400 | It's just simply the number of persons there.

00:09:55.840 | That way, they can appropriately

00:09:58.160 | set out congressional districts,

00:09:59.500 | that they can appropriately choose

00:10:01.060 | the number of congressional representatives

00:10:04.700 | for each state, for each district.

00:10:06.740 | That's it.

00:10:07.580 | It's just a population count.

00:10:08.420 | And there's no data more than that that's needed.

00:10:10.700 | And there is major danger

00:10:12.300 | of providing that detailed level data.

00:10:16.740 | The historical analogs are just simply horrific

00:10:20.500 | when you study them through.

00:10:21.900 | Forgive the tangent, but back to the task at hand.

00:10:26.400 | So, the good news is that the crisis will end

00:10:29.100 | at some point.

00:10:29.940 | So, it can end with social distancing

00:10:31.340 | being effective enough to get on top of new cases

00:10:34.540 | and it can start to be quarantined down.

00:10:36.900 | You see this in successful disease management,

00:10:38.860 | even with diseases like Ebola.

00:10:40.620 | Once they're able to get ahead of the community spread,

00:10:43.400 | you can start to stamp it out.

00:10:45.040 | It could also end with improved therapeutic treatment.

00:10:48.540 | The therapeutic treatment could sufficiently

00:10:51.220 | be effective.

00:10:53.060 | New drugs could be developed that are effective

00:10:54.880 | in beating the infection.

00:10:57.260 | It's possible it could be treated

00:10:59.180 | with some sort of vaccine, if that were developed

00:11:01.540 | and if it were considered to be safe

00:11:02.820 | and if there were widespread development of it,

00:11:04.720 | then that would be a possible outcome of it.

00:11:07.260 | Or it could just simply be managed

00:11:08.760 | with a continual low-level scenario

00:11:11.660 | in which the medical infrastructure

00:11:13.940 | was able to handle the number of serious critical cases

00:11:16.460 | and most people say, "I've gotta get back to work."

00:11:18.660 | We don't know.

00:11:19.740 | I don't see how the viral event

00:11:21.860 | is anything less than a couple of months, though.

00:11:24.540 | As I've watched the timing development,

00:11:26.380 | for example, you see leaders of nations,

00:11:28.780 | the president of France, the president of the United States,

00:11:30.620 | say, "We've gotta go on lockdown for 15 days."

00:11:33.500 | I think that's good and 15 days is probably good.

00:11:36.800 | I don't think 15 days is gonna eventually be long enough

00:11:39.700 | just simply because it will have an effect,

00:11:42.700 | but probably when you get to the end of 15 days,

00:11:44.700 | they're gonna say, "We need a little bit more time."

00:11:46.640 | It would seem if we study the lessons learned in Wuhan,

00:11:49.460 | it would seem that a month would be kind of the minimum.

00:11:52.300 | And then for time to get back,

00:11:53.900 | even if a month were able to completely stop the spread,

00:11:56.580 | you had total complete compliance,

00:11:58.540 | which is a big if, a big question mark,

00:12:01.940 | it still seems a little bit short.

00:12:06.180 | A month seems to me to be the minimum.

00:12:08.860 | And I think that the government representatives

00:12:11.540 | who are trying to manage it probably know that,

00:12:14.040 | but they're not sure of it any more than I'm sure of it.

00:12:16.300 | They're thinking, "Let's start with 15 days.

00:12:18.300 | "It's easier to announce 15 days

00:12:19.960 | "than it is to announce two months."

00:12:21.720 | And so then people that in terms of social management,

00:12:25.980 | the biggest danger in a situation like this

00:12:27.580 | is human psychology,

00:12:28.940 | panic that destroys the supply lines, everything.

00:12:32.400 | Just the contagion of human psychological panic

00:12:35.420 | is the number one risk.

00:12:36.720 | And so they're trying to manage that.

00:12:39.060 | And government officials know

00:12:41.300 | that they can't simply lie anymore.

00:12:43.280 | They can't say, "Oh, it's not a big deal.

00:12:44.620 | "We're gonna beat this virus back

00:12:45.860 | "and we're well on top of it."

00:12:47.300 | They know that that is not gonna be believed.

00:12:49.380 | And so now their public position has to go to,

00:12:53.260 | this is a serious problem.

00:12:56.000 | But then little by little,

00:12:56.920 | they ramp up the potential effects.

00:12:58.720 | And so you start to see government officials

00:13:00.440 | giving more serious warnings.

00:13:03.720 | And that gives time for the human population

00:13:06.240 | to come to terms with the seriousness of the event.

00:13:09.440 | So that's what you're seeing right now.

00:13:12.200 | Now, your guess is as good as mine,

00:13:13.920 | but in my mind, I would say I see a minimum

00:13:16.880 | of a couple of months.

00:13:18.500 | Now, I do think a lot can change in a couple of months.

00:13:21.280 | Possibly we'll get some relief due to warmer weather.

00:13:24.480 | That might have some impact.

00:13:26.580 | Possibly we'll be able to get on top of the quarantining.

00:13:29.480 | Possibly new therapeutic methodologies

00:13:34.480 | will be developed by the doctors who are studying this.

00:13:37.420 | Two months is a lot of time for things to happen.

00:13:39.880 | And we'll come up with some new solutions

00:13:41.640 | and new opportunities of things that could happen, possibly.

00:13:45.440 | But we don't know.

00:13:46.280 | So maybe this is longer term.

00:13:47.600 | But even a month or two is certainly devastating.

00:13:51.200 | Now, I've talked about the economic problems,

00:13:53.000 | and those should be by now be completely apparent to you.

00:13:56.920 | You right now have on a global basis,

00:13:59.720 | almost every country and every economy in the world

00:14:03.160 | freezing a huge percentage of their economic activity.

00:14:08.160 | Now, it's not every country yet,

00:14:11.060 | but it will likely be every country very soon.

00:14:14.440 | About the only countries that can be spared

00:14:16.560 | would be countries that took very early action

00:14:19.240 | to close their borders.

00:14:20.680 | I think this is what you see happening in Russia,

00:14:22.400 | for example.

00:14:23.240 | Russia has continuing to experience

00:14:25.240 | strong economic activity.

00:14:27.000 | And I think that's for two reasons.

00:14:28.720 | Number one, Russia has very difficult border controls

00:14:32.360 | with a lengthy visa process for anybody who wants to come.

00:14:35.200 | And so there are only a small number of countries

00:14:37.240 | that can travel to Russia with visa-free access.

00:14:39.600 | And most people have to go through a process

00:14:42.740 | of visiting Russia by obtaining a visa.

00:14:44.960 | And that process takes generally at least a week or two,

00:14:47.360 | a couple of weeks to finalize.

00:14:49.600 | And so there are fewer people,

00:14:52.400 | there's fewer people traveling in and out of Russia

00:14:56.080 | than there is in other places.

00:14:57.600 | In addition, Russia was very quick

00:14:59.360 | to close their borders completely.

00:15:00.840 | They sealed off their border with China.

00:15:02.520 | And at this point,

00:15:03.500 | they've been very quick to close other things.

00:15:05.560 | And so I think they got ahead of the curve

00:15:08.520 | by locking down people coming in.

00:15:11.880 | Now, that assumes that the data is accurate.

00:15:13.880 | I don't have any reason to believe it's not,

00:15:15.520 | but we'll see in time.

00:15:16.880 | And so a country like Russia

00:15:18.420 | can still be at that initial phase

00:15:20.120 | where they're just simply containing the individuals

00:15:22.560 | and they don't have to lock down all of the economy.

00:15:26.680 | And so, and that's, if that's true,

00:15:30.200 | if they've been able to quarantine the individuals,

00:15:32.820 | there's no reason why they would have to lock down

00:15:34.920 | the entire economy.

00:15:36.200 | If you have a nation,

00:15:37.300 | and if that nation has sealed borders

00:15:39.280 | with no people coming in and no people going out,

00:15:41.600 | and the virus is outside of the borders,

00:15:43.800 | except in a few, several dozens of cases inside,

00:15:46.960 | and those people inside the borders are quarantined,

00:15:50.200 | and if all the people

00:15:51.320 | that they've come in contact with are quarantined,

00:15:53.400 | then that can be sufficient

00:15:54.400 | to stop the spread of a viral pandemic.

00:15:56.800 | And that's what countries tried in the beginning.

00:15:58.800 | It's just simply that in many countries,

00:16:00.620 | there was not enough testing

00:16:02.720 | and there was too many people infected.

00:16:04.360 | And once you get to thousands

00:16:05.480 | of thousands of people infected,

00:16:06.880 | there's just no way to pursue that strategy anymore.

00:16:10.400 | And so the locking down the borders,

00:16:11.880 | that's happening all around the world.

00:16:14.080 | Point is that you can see

00:16:15.360 | this is obviously economically devastating,

00:16:17.920 | completely devastating.

00:16:19.540 | And this is only just getting started.

00:16:22.080 | Now, I've spoken extensively in previous shows

00:16:24.240 | about the economic impacts.

00:16:25.800 | You can see that happening right now.

00:16:27.720 | Our neighbors are hurting.

00:16:29.540 | There's no other way around it.

00:16:32.200 | Our neighbors are hurting.

00:16:33.680 | But it's only just getting started.

00:16:35.700 | If you actually look at what's happened,

00:16:38.420 | very few people have actually missed their first paycheck.

00:16:42.100 | People are starting to get laid off,

00:16:43.700 | but there's still,

00:16:44.660 | you're being paid for the work

00:16:45.660 | that you did a week or two ago.

00:16:47.180 | It's only getting started.

00:16:49.100 | And so we're still at a situation,

00:16:50.700 | we're still in a scenario

00:16:52.300 | in which the actual effects are not being

00:16:56.140 | really felt yet.

00:17:00.820 | Many employers are still trying to keep their staff.

00:17:03.740 | Many employers are still trying to say,

00:17:05.220 | well, let's cut overtime.

00:17:06.740 | Let's keep staff, et cetera.

00:17:08.700 | Some employers have reserves.

00:17:10.380 | They're trying to figure out how to keep those reserves.

00:17:12.240 | They're figuring out what they can do

00:17:13.420 | that's just a minimum amount

00:17:14.860 | to keep their employment staff.

00:17:16.620 | But we're just getting started.

00:17:18.700 | And I think you need to honestly recognize that fact.

00:17:22.420 | This is just getting started.

00:17:24.260 | It may feel exhausting by this time,

00:17:26.340 | but we're just getting started.

00:17:28.700 | And so the rippling effects

00:17:33.020 | are gonna continue to be felt broadly, broadly, broadly.

00:17:36.380 | If you're a landlord, for example,

00:17:38.380 | and you make your money collecting rents from your tenants,

00:17:43.380 | it's unlikely that any of your tenants

00:17:45.140 | have missed any payments yet.

00:17:47.560 | There's not really any reason

00:17:49.020 | except for the moral hazard of new laws,

00:17:50.860 | which we'll come to in a moment.

00:17:53.180 | But it's just getting started economically.

00:17:57.580 | Now, my concerns economically

00:18:00.100 | have been extremely high for a while,

00:18:02.320 | but now my concerns about monetary and fiscal policy

00:18:05.300 | are growing.

00:18:06.700 | And I think you need to think,

00:18:07.700 | we need to talk briefly about this

00:18:09.540 | because you need to understand how severe this is.

00:18:12.980 | I'm going to differentiate fiscal policy

00:18:18.700 | versus monetary policy.

00:18:20.220 | This is normal in macroeconomics.

00:18:21.860 | Fiscal policy is generally considered

00:18:23.500 | to be the behavior and the actions of a government

00:18:26.120 | in terms of how that government runs their finances.

00:18:29.800 | It comes into taxation policy, spending policy, et cetera.

00:18:33.580 | That's lumped in under fiscal policy.

00:18:35.740 | Monetary policy is when you have a Federal Reserve Bank,

00:18:39.860 | a national bank for a country, like in the United States,

00:18:42.860 | even though it's not a governmental entity,

00:18:45.100 | it's a private entity,

00:18:45.940 | you have the Federal Reserve Board

00:18:47.300 | that runs the money supply.

00:18:48.940 | And so you see the actions of the Federal Reserve

00:18:52.020 | trying to bring in monetary stimulus

00:18:54.980 | and trying to bring in cut rates.

00:18:57.540 | They're trying to,

00:18:58.860 | eliminating cash reserve requirements for banks,

00:19:03.340 | dramatically increasing the amount of money,

00:19:06.820 | quantitative easing, various softening of regulations,

00:19:09.620 | trying to pump money in,

00:19:11.420 | in order to keep employment up

00:19:13.860 | and make money easily available

00:19:15.220 | so that people will stay economically active,

00:19:17.340 | and then to keep inflation down.

00:19:20.860 | That's the dual fold mandate of the Federal Reserve.

00:19:23.740 | Now, fiscal policy is the actions of the government.

00:19:25.780 | And so you see right now,

00:19:26.940 | you see major changes and major cries

00:19:29.940 | across the political spectrum for people to do something,

00:19:33.460 | do something to relieve the pain.

00:19:36.780 | Now, these are very, in some ways, predictable,

00:19:40.540 | but this is dangerous territory.

00:19:43.260 | And I am deeply concerned about what happens.

00:19:46.820 | Now, you can take a mainstream perspective,

00:19:50.100 | and let's assume that you believe in modern monetary theory.

00:19:54.980 | You believe that the Federal Reserve of the United States,

00:19:57.820 | and I know that you may be an international listener,

00:20:01.500 | it's just, of course, being a US American myself,

00:20:04.460 | it's very difficult for me to properly understand

00:20:07.620 | what the Guatemalan government is doing,

00:20:10.780 | while also considering what the Indian government is doing

00:20:13.460 | and the Canadian, I cannot,

00:20:14.940 | I'm not competent to do it internationally.

00:20:16.700 | So I need to focus on the United States,

00:20:18.540 | but you interpret this for your country of residence

00:20:20.900 | and/or countries of concern.

00:20:24.420 | Let's assume that you believe in modern monetary theory,

00:20:28.100 | believe in modern, in the Federal Reserve system,

00:20:31.020 | that you believe that the Federal Reserve

00:20:32.620 | is a necessary and effective control mechanism

00:20:36.620 | that can properly stimulate the economy

00:20:45.460 | during difficult times and then properly pull back.

00:20:48.460 | You're a Keynesian through and through,

00:20:50.920 | you're convinced that this system works.

00:20:54.260 | I'm not, but let's assume that you are.

00:20:56.300 | In these kinds of situations,

00:20:59.660 | you have to at least admit that this balance,

00:21:03.900 | striking this balance is extraordinarily difficult.

00:21:07.540 | Figuring out how to do things just enough,

00:21:12.460 | but not too much, is extraordinarily difficult.

00:21:17.860 | There are many learned investors,

00:21:23.460 | there are many learned economists

00:21:25.020 | who applaud the massive action

00:21:27.820 | that the US Federal Reserve Board

00:21:30.940 | has taken over the last week

00:21:32.860 | and is still taking day by day a new announcement comes out.

00:21:36.500 | And so there are many people who applaud that

00:21:38.560 | as doing the right thing.

00:21:40.340 | And you see that reflected, for example, in the stock market.

00:21:42.580 | You'll see big, lots of money here,

00:21:44.580 | lots of free money and the stocks go up, right?

00:21:46.380 | And then the next day something else happens

00:21:48.140 | and things change.

00:21:49.900 | So maybe this is all true.

00:21:51.700 | Maybe this is exactly what's needed

00:21:53.180 | and maybe this is right.

00:21:55.220 | But it's at least extraordinarily risky

00:21:57.340 | and extraordinarily delicate to get the balance right.

00:22:01.500 | And it's hard for me to believe

00:22:02.740 | that the balance is gonna be gotten exactly right.

00:22:05.420 | Now, maybe it's just a minor difference,

00:22:07.460 | but it's a very, very difficult place to be.

00:22:11.460 | Time will tell.

00:22:14.300 | I hope that they get it right.

00:22:18.020 | I hope that this is just another bump in the road

00:22:21.140 | and we get back to life is good and everything is fine.

00:22:24.020 | But we're at the level in terms of the economic risk.

00:22:28.700 | This is certainly at the level that comparing it

00:22:32.020 | to the Great Depression in the United States

00:22:33.840 | is not unwarranted.

00:22:36.720 | Treasury Secretary, Steve Mnuchin,

00:22:40.220 | how do you say his name?

00:22:41.300 | I don't listen to news.

00:22:42.220 | I don't know how to say his name.

00:22:43.140 | I just read it, Mnuchin, probably.

00:22:47.860 | M-N-U-C-H-I-N, however you pronounce his name.

00:22:50.300 | I don't know.

00:22:51.140 | He was quoted as using an example case of 20% unemployment

00:22:57.180 | and some of his scenarios that he was recently discussing.

00:23:03.140 | That quickly made the headlines about 20% unemployment.

00:23:06.780 | Now then, it was quickly walked back.

00:23:08.220 | No, we're not predicting this.

00:23:09.180 | We're not saying this.

00:23:10.100 | We're just saying this is an example of what could happen.

00:23:11.780 | Well, this is certainly a valid example of what could happen.

00:23:14.400 | If you look around you at the percentage of people

00:23:17.460 | who are being impacted by current events,

00:23:21.500 | it sure seems like more than 20% of the economy to me.

00:23:24.980 | It sure seems like much more than that.

00:23:26.900 | And so to say that that could lead to 20% unemployment

00:23:30.140 | does not to me seem to be a stretch.

00:23:33.740 | Time will tell.

00:23:34.740 | But 20% of unemployment is devastating.

00:23:37.620 | It's devastating.

00:23:38.460 | That's the level of unemployment that was experienced

00:23:40.540 | during the Great Depression in the United States.

00:23:42.660 | Totally devastating.

00:23:45.020 | Let me go now to fiscal policy.

00:23:48.000 | What concerns me greatly,

00:23:50.820 | well, first, what can we be grateful for?

00:23:52.980 | We can be thankful that this current economic crisis

00:23:57.360 | has come after a period of somewhat strong economy.

00:24:02.360 | I think that we would certainly acknowledge

00:24:04.420 | that economic activity has been high for the past years.

00:24:07.540 | Unemployment has been historically low for the past years.

00:24:11.100 | And this has been great.

00:24:12.340 | The stock market was high.

00:24:13.740 | People were feeling good.

00:24:15.020 | Things were happening.

00:24:16.020 | And that was great for a lot of people.

00:24:17.900 | And so you would think that hopefully this means

00:24:21.260 | that some households were strengthened

00:24:23.300 | during periods of high employment.

00:24:25.440 | Perhaps they were able to set aside savings.

00:24:27.500 | They were able to engage in prudent planning, et cetera.

00:24:30.940 | Now, if you believe that,

00:24:32.180 | I don't know where you get that evidence.

00:24:35.980 | Because my observation,

00:24:37.700 | which is only being strengthened by my opinion,

00:24:40.040 | which is being strengthened right now,

00:24:41.800 | is that generally the vast majority

00:24:44.540 | of modern US Americans at least

00:24:47.420 | simply have completely forgotten

00:24:49.340 | about the idea of thrift and frugality and saving.

00:24:53.300 | Outside of putting money into a retirement account,

00:24:56.560 | it seems as though most people

00:24:57.820 | have almost no concept of saving anymore,

00:25:00.340 | that everything is fueled by debt.

00:25:02.260 | And so I hope I'm wrong,

00:25:04.700 | but there's such a tiny percentage of people

00:25:06.580 | who probably use that period of high employment

00:25:08.860 | to set aside reserves.

00:25:10.660 | And because the saving that most people do

00:25:14.680 | is in the stock market, they're hurting.

00:25:16.860 | Many people,

00:25:18.060 | and especially in the personal finance community,

00:25:19.740 | have, "Oh, I've got a three-month emergency fund,

00:25:22.140 | "but I've got hundreds of thousands

00:25:23.260 | "always in the stock market."

00:25:24.700 | That's crazy.

00:25:25.760 | Because now your stocks are down 20, 30%, possibly,

00:25:28.780 | depending on how your portfolio is allocated,

00:25:31.020 | and you've got a mere three-month emergency fund.

00:25:33.900 | Well, three-month emergency fund is good,

00:25:36.460 | but if I'm right, and I hope I'm wrong,

00:25:39.020 | but if I'm right,

00:25:39.860 | all of a sudden that three-month emergency fund

00:25:41.500 | starts to feel a little bit light

00:25:44.620 | when you look forward at the coming months

00:25:46.140 | of potential economic hardship.

00:25:48.940 | So, and the number of people

00:25:51.060 | with a three-month emergency fund is vanishingly small.

00:25:54.940 | So let's go back to where we were.

00:25:58.260 | So good thing is that the economy has been pretty good

00:26:00.700 | over the past couple of years, generally speaking.

00:26:03.860 | But how good has the budget been

00:26:07.700 | for the United States of America?

00:26:09.420 | Well, of course, I've talked about this a lot,

00:26:11.820 | but I want to emphasize to you

00:26:14.320 | that the US government was running this year,

00:26:17.580 | prior to the emergence of COVID-19,

00:26:20.840 | was planning on a $1 trillion deficit.

00:26:23.520 | The US government, prior to the emergence of COVID-19,

00:26:28.740 | was running a $1 trillion deficit

00:26:32.100 | during a booming economy.

00:26:33.960 | Now what?

00:26:39.780 | What happens when now we add everybody clamoring

00:26:42.760 | for free money for everyone to that?

00:26:44.980 | Where does that come from?

00:26:46.260 | The first thing you have to ask is,

00:26:49.340 | is it likely that we'll get lots of free money?

00:26:52.300 | I don't see any way to stop it.

00:26:53.940 | Generally, historically in the United States,

00:26:58.340 | Republicans have had more sympathy

00:27:00.620 | for financial conservatism than they have now.

00:27:05.940 | That has completely disappeared over the past years.

00:27:09.920 | The Republicans oversaw a $1 trillion deficit

00:27:13.720 | when they had control of Congress

00:27:16.480 | and they had control of the House, sorry, same thing,

00:27:19.780 | the House of Representatives and the Senate

00:27:21.500 | and the presidency.

00:27:23.060 | They didn't rein in any kind of government spending.

00:27:24.940 | They didn't repeal Obamacare.

00:27:28.760 | They just continued to spend money like crazy.

00:27:31.380 | You have at the head of the Republican Party,

00:27:32.940 | you have a president who is not known

00:27:34.580 | for his thrift and frugality.

00:27:37.020 | And he's very much a populist figure

00:27:39.580 | who wants to appeal to the people

00:27:40.860 | and he wants to be seen as moving fast.

00:27:42.620 | So you see the headlines.

00:27:43.820 | President Trump says, "We're gonna deliver money fast.

00:27:45.780 | "We're gonna do it within the next two weeks."

00:27:47.540 | Now maybe that's what's needed, right?

00:27:49.200 | Maybe I'm completely wrong.

00:27:50.640 | I often am, right?

00:27:52.340 | Maybe that's what's needed.

00:27:53.660 | But regardless, how is somebody gonna stand up

00:27:58.400 | and rein that in?

00:27:59.760 | Now on the other side, so on the Republican side,

00:28:02.540 | there are no prominent fiscal hawks like there once were.

00:28:06.780 | Nobody is loud about stopping that.

00:28:09.100 | On the Republican side,

00:28:11.160 | Republican congressional representatives and senators

00:28:14.120 | have learned that to oppose President Trump

00:28:17.020 | is very dangerous politically.

00:28:19.260 | And so if President Trump is openly hawking the need

00:28:22.180 | for lots of money for Americans,

00:28:24.660 | it's hard to see how a Republican stands up

00:28:26.580 | and says something against that.

00:28:28.780 | On the Democratic side, there is no,

00:28:32.100 | I'm not aware of any prominent Democrat

00:28:34.340 | who believes in and advocates for fiscal conservatism

00:28:39.140 | in any way.

00:28:40.060 | We're going through the last stages

00:28:42.280 | of a Democratic presidential primary

00:28:44.580 | in which it seems like a race to see who can promise

00:28:46.940 | more money, more bigger government programs to anybody.

00:28:50.140 | And so where is the political restraint gonna come in?

00:28:53.020 | I even think historically,

00:28:54.080 | if you were to go back to 2008 and the financial crisis,

00:28:56.700 | if you remember, there was a major outcry

00:29:00.340 | on behalf of US American society saying that,

00:29:03.620 | "No, we should not bail these banks out.

00:29:05.660 | "We should not bail these people out."

00:29:06.940 | And the first bill in the fall of 2008 failed,

00:29:09.900 | the big stimulus TARP bill failed because of that outcry.

00:29:13.820 | And then all of a sudden, I can't remember which firm it was,

00:29:15.940 | somebody went bankrupt, blah, blah, blah.

00:29:17.780 | And now everyone said, "Oh, okay, we've got to act."

00:29:20.420 | And then everyone started to act

00:29:21.820 | and all the Republicans started signing for it

00:29:23.540 | and they passed TARP and the big bailout funds

00:29:26.500 | against the outcry of the American people.

00:29:29.820 | Now, if you were a politician looking back on that,

00:29:32.340 | you would see that, "Hey, you know what, that worked."

00:29:35.580 | 'Cause you could make an argument that that worked.

00:29:38.140 | You could also make a very strong argument that it didn't,

00:29:40.020 | that it just postponed the inevitable,

00:29:41.980 | but you could make an argument that that worked.

00:29:43.860 | And what I would say is that it seems to me

00:29:45.660 | that there's a very different US general population,

00:29:48.860 | a very different citizenry, a very different voter base

00:29:52.860 | than existed in 2008.

00:29:55.020 | In 2008, you had the Tea Party movement,

00:29:57.260 | fiscal conservatism and we're not gonna spend money

00:29:59.580 | and no new tax, blah, blah, blah.

00:30:01.220 | 2020, where is that?

00:30:04.180 | Where are those people?

00:30:06.340 | I'm in that camp ideologically.

00:30:09.820 | I don't have any friends really that really believe that.

00:30:12.900 | Everybody has gone all in on big government.

00:30:15.500 | And so I don't expect even that kind of restraint.

00:30:18.100 | And so I think that some version

00:30:20.700 | of these massive new programs is going to spend.

00:30:22.620 | Now, whether it's $1,000 a month

00:30:24.540 | or $10,000 of free money for everyone,

00:30:26.620 | something's gonna get spent.

00:30:28.140 | Well, now let's go back to the basics of government.

00:30:31.740 | Where does the government get money?

00:30:33.540 | Let's say you're running the US government,

00:30:35.980 | you're trying to sit down and say,

00:30:36.820 | how do I increase my income?

00:30:38.580 | Where does the US government get money?

00:30:40.580 | Well, it could come from some form of user fees, right?

00:30:45.220 | Maybe you fund the national park system by park entrances.

00:30:48.380 | That is an almost meaningless number

00:30:51.660 | in terms of the global expenditures of the US government.

00:30:54.700 | Yes, you have to pay 100 and whatever dollars

00:30:56.420 | for a passport and yes, you have to pay

00:30:57.900 | to go into a national park system,

00:30:59.660 | but user fees are a tiny percentage.

00:31:01.860 | They're almost not even worth thinking about.

00:31:03.460 | But yes, user fees do exist.

00:31:05.460 | What's the next big thing?

00:31:06.620 | Well, taxes.

00:31:07.780 | That's where most money comes from is taxes.

00:31:10.500 | Even though there's a $1 trillion deficit,

00:31:12.220 | there's still trillions of other dollars of tax revenue.

00:31:15.020 | Well, what's gonna happen with tax revenue this year?

00:31:19.820 | Because so much tax revenue is tied to income

00:31:24.540 | and income taxes fund a huge percentage

00:31:27.560 | of the tax base for the US federal government,

00:31:30.380 | tax revenues are going down because incomes are going down.

00:31:33.980 | Do you think that investors are gonna be paying

00:31:35.380 | lots of capital gains taxes on their tax returns this year?

00:31:40.140 | That's where most of the tax revenue is from the wealthy

00:31:42.140 | is in capital gains taxes.

00:31:43.500 | And where are they gonna be experiencing

00:31:45.260 | major capital gains?

00:31:46.560 | So capital gains revenues are going down.

00:31:50.180 | What about income taxes?

00:31:51.540 | Do you think a lot of people

00:31:52.380 | are gonna be increasing their incomes this year?

00:31:54.860 | You're gonna have losses everywhere

00:31:56.980 | across the tax base.

00:31:58.480 | Many business owners are gonna be reporting business losses.

00:32:01.900 | Many individual employees are gonna be having

00:32:05.220 | severe cuts in income, if not going down to nothing.

00:32:08.560 | So you're gonna have major decreases in tax revenue

00:32:11.420 | just simply due to the economy being pulled back.

00:32:14.220 | And this is obvious when especially when you base

00:32:16.940 | an entire system on income taxes.

00:32:18.920 | Now, in addition to that,

00:32:22.200 | there'll probably be some version of tax cuts.

00:32:25.300 | You've seen proposals about tax cuts on payroll taxes.

00:32:29.080 | There'll probably be some version of tax cuts

00:32:31.820 | because especially politically,

00:32:34.100 | generally Republicans will want to advocate

00:32:36.740 | for some form of tax cut

00:32:39.140 | rather than just giving away free money.

00:32:41.140 | And so maybe some kind of tax cut proposal goes through.

00:32:46.420 | Regardless of any changes in tax code,

00:32:48.460 | tax revenues are going down.

00:32:50.200 | So that's the big source of government revenue.

00:32:53.080 | Tax revenues are going down.

00:32:54.260 | Well, remember, we already had a trillion dollar deficit

00:32:56.340 | during a good economy.

00:32:57.440 | Well, what about the next source?

00:33:00.300 | Well, the next source is debt.

00:33:01.800 | The US government can finance its debt,

00:33:05.700 | finance its spending through the creation of debt,

00:33:07.500 | the purchasing of debt.

00:33:08.740 | And I think that this is an area where the debt market

00:33:10.900 | will probably continue to be strong.

00:33:12.700 | You see that people still believe,

00:33:14.640 | many investors still believe in the safety

00:33:16.560 | of US federal debt because the US federal debt,

00:33:18.620 | the federal government has unlimited taxing ability.

00:33:20.980 | They've never defaulted on a debt payment.

00:33:23.740 | And so you'll have the issuance

00:33:25.820 | of billions of dollars of new debt.

00:33:27.940 | Maybe so, right?

00:33:30.620 | That's probably the least damaging for right now

00:33:34.260 | because there's still significant room

00:33:36.420 | where the government can borrow a lot more money.

00:33:38.820 | It's not quite so short term

00:33:41.140 | in terms of the amount of money they can borrow.

00:33:42.860 | That's probably least damaging.

00:33:44.900 | But then the third area is inflation, right?

00:33:47.820 | That's the third way other than, sorry, fourth way, I guess,

00:33:50.140 | user fees, taxes, debt, and then inflation.

00:33:52.580 | Governments can inflate away their debt

00:33:54.540 | by just simply increasing the monetary supply

00:33:57.980 | and making their repayment of the debt

00:34:01.420 | using less dollars that are worth less.

00:34:05.340 | So if you think about these scenarios,

00:34:06.980 | these are what you have to face.

00:34:08.720 | Where is it gonna come from?

00:34:11.360 | Well, either of those scenarios is bad,

00:34:13.320 | meaning the two probable ones, debt and inflation.

00:34:17.860 | User fees aren't gonna increase,

00:34:20.380 | and those are meaningless anyway.

00:34:22.420 | Taxes aren't gonna increase.

00:34:24.060 | Nobody, not even the most staunch Democrat

00:34:26.420 | during this time of this crisis is gonna go out

00:34:28.180 | and say we need to increase taxes, even on the wealthy.

00:34:30.260 | No one's gonna do it.

00:34:31.140 | They don't do it during times of crisis.

00:34:32.520 | They've never done it.

00:34:33.860 | You send me the articles if you find somebody doing it.

00:34:36.300 | But when times are booming,

00:34:38.620 | then you'll have candidates such as Senator Warren

00:34:40.860 | or Senator Sanders or Senator Biden,

00:34:43.820 | you'll have these candidates saying,

00:34:44.900 | yeah, we gotta increase taxes.

00:34:46.660 | They will not be talking about that anymore.

00:34:48.940 | They never do.

00:34:51.320 | During times of economic crisis,

00:34:53.820 | everyone who's vocal advocate for increased taxation,

00:34:56.460 | they kind of quietly close their mouth,

00:34:58.180 | just like during times of economic crisis,

00:35:00.200 | those who are vocal advocates

00:35:01.780 | of cutting government spending go down.

00:35:03.820 | Because that's the other side.

00:35:04.680 | I forgot to start there.

00:35:06.860 | I talked about revenue.

00:35:08.220 | Well, what else could the government do?

00:35:09.340 | Well, they could cut services, right?

00:35:10.940 | They could cut spending.

00:35:13.740 | The problem is that the vast majority of the spending

00:35:15.680 | is now non-discretionary.

00:35:17.660 | It's required.

00:35:19.740 | The vast majority of the government budget

00:35:21.920 | is built up on social security,

00:35:23.880 | Medicare, Medicaid, and military spending.

00:35:26.720 | Well, where are you gonna have any cuts in those?

00:35:29.400 | And people are hurting.

00:35:30.920 | So where are you gonna have any cuts?

00:35:32.960 | US government doesn't cut spending anymore.

00:35:35.900 | And so it just gets worse and worse.

00:35:37.640 | So you're gonna have debt and inflation,

00:35:39.240 | either more debt or more inflation.

00:35:41.200 | Now, if you have more debt,

00:35:42.440 | all this does is extend the problem out

00:35:44.160 | to farther in the future.

00:35:45.520 | Or if you have inflation,

00:35:46.760 | all this does is create more problems.

00:35:49.720 | So I know I'm just giving you a long list of problems,

00:35:53.120 | but think soberly and seriously

00:35:55.520 | about where we go from here and don't be caught unaware.

00:35:58.320 | On both the monetary side,

00:36:02.720 | you've got potential for huge problems.

00:36:05.200 | And on a fiscal side, you've got huge problems.

00:36:09.320 | Now, the interaction of these two things,

00:36:10.840 | the monetary side and the fiscal side,

00:36:12.500 | is extraordinarily complicated.

00:36:14.680 | I hate to talk about it because I've studied this stuff

00:36:17.520 | for years and I barely understand it enough

00:36:19.500 | to even open my mouth.

00:36:21.820 | And I especially am cautious

00:36:23.140 | about opening my mouth in public.

00:36:24.780 | Point is that it's rough waters ahead.

00:36:32.940 | Very, very rough waters ahead.

00:36:37.140 | The most perfect scenario,

00:36:39.460 | perfect balancing of monetary stimulus

00:36:41.800 | by the Federal Reserve,

00:36:43.140 | huge amounts of money going to US taxpayers,

00:36:47.400 | the most perfect scenario ahead

00:36:49.340 | indicates major increases in debt.

00:36:52.980 | Assume that taxes, okay, we deal with that by debt.

00:36:55.580 | Assume that we don't have inflation.

00:36:57.500 | The best scenario is major increases in debt.

00:37:00.540 | What does that do for the future 10, 15, 20 years from now?

00:37:03.380 | Does that make it brighter?

00:37:05.100 | Do you honestly believe

00:37:06.200 | that somehow something's gonna change

00:37:08.020 | and now somebody's gonna come to power

00:37:10.540 | that's gonna pay down the debt?

00:37:12.820 | Politically, do you see that?

00:37:14.380 | Think back to the shows I did.

00:37:15.540 | If you didn't listen to them, go back.

00:37:16.580 | The ticking time bomb that no one wants to talk about,

00:37:19.700 | not gonna happen.

00:37:20.580 | Worst case scenarios, massive inflation.

00:37:25.560 | I don't think hyperinflation,

00:37:28.220 | maybe it's just my normalcy bias,

00:37:30.420 | but I just can't believe the US government

00:37:32.500 | gets in a situation of hyperinflation,

00:37:34.700 | but at least mass inflation.

00:37:36.520 | And that's the most perfect scenario.

00:37:44.180 | Two months shut down, goose things a little bit,

00:37:48.060 | give away some free money.

00:37:49.420 | And I guess the final thing I would say,

00:37:55.500 | give away some free money

00:37:56.340 | and then everything kind of gets back to normal.

00:37:57.820 | I don't see it happening.

00:37:59.100 | I can't really believe that scenario,

00:38:00.500 | but that's the best case scenario.

00:38:02.200 | I'll go back one more thing.

00:38:05.780 | The single biggest thing that concerns me right now

00:38:09.180 | is what is properly termed moral hazard.

00:38:14.320 | I'm having a hard time believing the newspaper headlines

00:38:17.840 | that I'm reading right now.

00:38:19.200 | I was doing a live stream for one of my courses

00:38:22.200 | the other night.

00:38:23.040 | We were talking about my radical preparedness course.

00:38:25.560 | I was talking with the students and somebody said,

00:38:27.320 | "The governor of my state has just canceled evictions,

00:38:32.320 | "has just made it possible,

00:38:34.560 | "made it illegal to evict a tenant."

00:38:37.160 | I asked him what state, he said, "Maryland."

00:38:38.840 | I went and looked it up later.

00:38:40.240 | Government of the state of Maryland

00:38:42.620 | said that if you're a landlord,

00:38:43.880 | you can't evict your tenant

00:38:45.040 | during a time of national emergency

00:38:46.560 | or a state emergency.

00:38:47.680 | You can't evict a tenant.

00:38:48.720 | And it said to every single service provider,

00:38:51.640 | you can't cut off the service of the local people.

00:38:55.800 | You can't cut off somebody's water,

00:38:58.680 | somebody's power, et cetera.

00:39:00.440 | Now, obviously you can understand the appeal that that has.

00:39:03.600 | All of us would understand,

00:39:05.280 | "Hey, that sounds pretty good."

00:39:07.520 | But just think about that.

00:39:08.560 | Put yourself in the shoes of those people.

00:39:11.400 | If I were in the state of Maryland

00:39:12.900 | and I knew that my landlord could not evict me,

00:39:15.680 | would I pay my rent?

00:39:16.840 | I think I probably would,

00:39:23.040 | 'cause to me it's a matter of moral duty.

00:39:25.880 | I've said I'll pay you,

00:39:26.740 | and if not, I've said I'll get out.

00:39:27.800 | I don't care what the law is.

00:39:29.440 | But I'm not trying to make myself sound good.

00:39:32.420 | I just know that most people don't believe that.

00:39:34.140 | Most people aren't in that situation.

00:39:36.920 | Why would you pay your rent

00:39:37.920 | if you know you can't be evicted?

00:39:39.120 | Why wouldn't you just hang on to your rent

00:39:40.640 | and keep your rent money and keep the cash in the bank?

00:39:43.240 | You'd be safer that way.

00:39:44.280 | Why would you pay your utilities

00:39:45.360 | if you know they can't be turned off?

00:39:46.920 | Just keep your money and hoard your money.

00:39:49.400 | 'Cause toilet paper is one thing,

00:39:51.480 | but hoarding cash is far more impactful

00:39:53.760 | and far more important if you're actually concerned

00:39:55.900 | about the difficult road ahead.

00:39:57.840 | I wouldn't pay my rent in that situation.

00:40:01.080 | I wouldn't pay my utilities.

00:40:02.180 | I would just wait.

00:40:03.180 | They can't shut 'em off.

00:40:04.680 | Worst case they can do is impose fees,

00:40:06.840 | and they probably won't do that,

00:40:07.840 | 'cause that would be politically unpopular.

00:40:09.160 | So I'll just pay it later after the crisis passes.

00:40:11.040 | For now, I'm gonna hoard money.

00:40:12.860 | Think about the moral hazard of just people wanting money.

00:40:18.000 | Where is there any expectation?

00:40:20.440 | Again, people haven't even lost paychecks yet, barely.

00:40:23.040 | Or if they've lost paychecks, it's one paycheck.

00:40:26.000 | And yet, where is the expectation?

00:40:27.720 | Where is the moral leadership on behalf of politicians

00:40:31.440 | saying, "We're gonna have a hard time,

00:40:33.840 | "but you know what?

00:40:34.680 | "You've prepared for this because you've saved money."

00:40:37.720 | It's like immediately the whole culture goes to,

00:40:39.880 | "Gimme, gimme, gimme.

00:40:40.960 | "Gimme, gimme, gimme.

00:40:41.900 | "Gimme, gimme, gimme."

00:40:43.200 | Now, I've had that basic assessment for many years

00:40:47.040 | that we've created a culture

00:40:48.680 | that's built upon the foundation of greed.

00:40:51.280 | Greed and larceny, the desire for other people's stuff,

00:40:53.920 | and greed for more of ourself.

00:40:55.160 | I don't wanna pay for it, I need more stuff.

00:40:56.520 | Give me more government services,

00:40:57.720 | and that's just what's gonna happen more.

00:40:59.280 | Now, if that moral foundation is true,

00:41:01.880 | where do we go from here?

00:41:03.120 | And then now, what about the war on savers?

00:41:07.400 | What if we do go to negative interest rates?

00:41:09.400 | Free money for everybody, cancel student loan interest,

00:41:12.200 | cut interest rates to zero.

00:41:13.200 | What about those who save money?

00:41:14.800 | I have for years believed in the moral rightness of thrift,

00:41:23.320 | of frugality, of caring for myself, of planning ahead.

00:41:26.400 | And I'm not gonna change that

00:41:27.520 | because I don't have any confidence

00:41:29.040 | in the ability of someone else to solve my problems.

00:41:33.240 | I have a responsibility to care for my family.

00:41:36.080 | I have a responsibility to care for my wife,

00:41:37.800 | to care for my children.

00:41:38.640 | That responsibility doesn't change

00:41:39.960 | whether someone else does it or not.

00:41:41.760 | Again, not trying to make myself sound good,

00:41:45.960 | but I acknowledge and I know that that's a minority position.

00:41:49.400 | Most people look to someone else to solve the problem

00:41:54.760 | and they don't take action.

00:41:57.120 | So what do you do when savers don't get any money?

00:42:03.120 | That's what's always already been had

00:42:05.080 | for the last number of years.

00:42:06.520 | The moral hazard here is tremendous.

00:42:09.960 | What about even at the corporate level?

00:42:12.200 | You immediately have the airlines coming and saying,

00:42:15.680 | well, we need to bail out.

00:42:17.680 | Well, why weren't you thinking about that

00:42:20.040 | over the last few years

00:42:22.160 | when you're doing billions of dollars of stock buybacks?

00:42:24.400 | Did you not think it would be a good idea

00:42:26.400 | to actually just save some money?

00:42:28.720 | And this goes back to 2008.

00:42:30.440 | What did we learn in 2008?

00:42:32.400 | We learned that if you're too big to fail,

00:42:33.920 | you'll never have to fail.

00:42:35.600 | You won't have to go bankrupt.

00:42:37.160 | The investors won't have to pay the price.

00:42:42.880 | And what do you see happening right now

00:42:44.400 | in the market in general?

00:42:45.840 | Well, everyone comes in and says,

00:42:47.320 | well, look, we're gonna have a hard times,

00:42:49.040 | but the Federal Reserve comes out and says,

00:42:50.400 | we're gonna prop you up.

00:42:52.360 | The US taxpayer, we're gonna prop you up.

00:42:54.800 | And so you have investors all in.

00:42:56.720 | And who does this make happy?

00:42:57.840 | It makes happy the vast majority of people

00:42:59.600 | who own mutual funds in their retirement accounts.

00:43:02.400 | And they have this glib idea

00:43:03.640 | that somehow it's all gonna be okay

00:43:05.040 | because I'm gonna be bailed out.

00:43:07.040 | Now we know that on the periphery,

00:43:08.320 | there might be some people that would lose money.

00:43:09.960 | Yeah, General Motors went bankrupt

00:43:12.240 | and some people got stiffed there.

00:43:13.800 | Yeah, Lehman Brothers went bankrupt and Bear Stearns.

00:43:17.120 | Yeah, we know that a few people lost money.

00:43:19.520 | But in general, we know that

00:43:21.760 | it all just worked out in the end.

00:43:23.840 | Now, what I think should happen

00:43:28.280 | is I think that you should allow the markets to work.

00:43:31.240 | And if Delta Airlines goes bankrupt,

00:43:33.440 | I'm sorry, if you work for Delta Airlines,

00:43:35.440 | that's unfortunate,

00:43:36.560 | but Delta Airlines needs to go bankrupt.

00:43:38.660 | It cleans the market of the dead detritus

00:43:42.040 | of these old companies

00:43:43.440 | and allows somebody else to come in to buy the airplanes.

00:43:46.400 | It allows the company to be reorganized

00:43:48.520 | and it works it through.

00:43:49.360 | Bankruptcy is the most moral,

00:43:51.080 | properly right way to handle it

00:43:53.440 | because everybody knows that was the risk.

00:43:56.480 | When you come in with these massive bailouts,

00:43:58.080 | it just gets worse and worse and worse

00:43:59.440 | and the moral hazard increases.

00:44:02.120 | And in the same way that you have the moral hazard

00:44:04.280 | of a tenant knowing that they don't have to pay

00:44:07.040 | their rent payment and they can't get evicted

00:44:09.600 | and knowing they don't have to pay their water bill

00:44:11.400 | and they can't have their water shut off,

00:44:13.960 | what do you think all the big executives know?

00:44:16.280 | Well, I'm Delta Airlines, I'm too important to fail,

00:44:19.560 | I'm too big to fail.

00:44:20.960 | And now you see that all across the entire economy.

00:44:23.520 | And so from a moral perspective,

00:44:28.400 | where is there any right moral thinking on this topic?

00:44:32.120 | If I went on a public news program

00:44:37.160 | and I said anything like that,

00:44:38.800 | all people would say is that I'm just mean

00:44:41.520 | and have harsh words, right?

00:44:43.680 | Because you're saying these things that are just mean

00:44:45.680 | and can't you see how, you know,

00:44:49.440 | can't you just see how mean this is?

00:44:52.480 | Somebody should say, you should have saved money.

00:44:58.200 | I don't like being the mean guy, but it's true.

00:45:02.480 | If you can't pay your rent because you lost one paycheck,

00:45:07.480 | that's your responsibility.

00:45:11.520 | I'm filled with sympathy of how difficult it is

00:45:14.600 | to make it on a small income, I'm filled with sympathy.

00:45:17.320 | I struggle to know how to help people,

00:45:21.720 | but the reality is nobody's gonna bail you out.

00:45:25.640 | And if you get used to people bailing you out

00:45:27.520 | because that's the political winds of the day,

00:45:29.000 | what do you do when the money is gone?

00:45:31.000 | This is why welfare is so destructive.

00:45:34.240 | It destroys people, why?

00:45:35.520 | Because it takes away any sense of self-worth.

00:45:40.520 | We all acknowledge that people need help,

00:45:43.560 | but we've gone so far past that, societally speaking.

00:45:47.840 | We've gone so far past that.

00:45:50.040 | It's just simply completely,

00:45:52.180 | (sighs)

00:45:54.180 | we've become untethered.

00:45:58.620 | Now, I hope, for my sake and your sake,

00:46:04.220 | I hope that this analysis is wrong.

00:46:09.220 | I hope that it works just one more time.

00:46:12.420 | Goose the economy one more time,

00:46:16.260 | give everybody $1,000 free money one more time.

00:46:20.580 | I hope that the virus is solved in two months.

00:46:23.660 | I hope that that is true.

00:46:25.760 | If that is true, I tell you what I will be doing.

00:46:30.220 | I will be tripling down on my previous pessimism

00:46:35.940 | and preparing for global financial collapse

00:46:38.800 | like never before.

00:46:40.000 | I felt pretty well prepared,

00:46:44.020 | far better prepared than the vast majority of people.

00:46:47.220 | But I'm getting ready to record an update

00:46:49.780 | for the students of my,

00:46:51.060 | how to prepare to survive and thrive

00:46:52.860 | during an economic crisis.

00:46:53.940 | I'm getting ready to prepare an update for them

00:46:55.540 | and all the things I wish I'd done,

00:46:57.420 | all the stuff that I thought was a little too extreme,

00:46:59.540 | I probably don't need that, probably won't be so bad.

00:47:01.500 | All of a sudden, things can change really fast,

00:47:03.620 | as you well know now.

00:47:05.300 | And now I feel a lot more exposed.

00:47:07.860 | And I'm not bragging, I'm saying,

00:47:10.020 | I am better prepared than the vast majority of people.

00:47:12.380 | My day-to-day looks like every other normal day.

00:47:17.140 | There's no actual apparent change in our life right now.

00:47:22.140 | Now, a month from now, there sure could be.

00:47:25.220 | But these problems are just stacking up.

00:47:31.420 | The economic problems are stacking up

00:47:35.740 | and it's only getting started.

00:47:37.640 | The monetary problems are stacking up

00:47:40.720 | and we've only just begun.

00:47:42.420 | The fiscal problems are stacking up

00:47:44.860 | and we've only just begun.

00:47:46.780 | (mouse clicking)

00:47:49.540 | This stuff is serious.

00:47:52.940 | Again, hope I'm wrong, hope it works one more time.

00:47:56.460 | But there comes a day in which it ain't gonna work.

00:47:59.020 | Now, what does that look like?

00:48:02.380 | I don't know.

00:48:04.180 | I'm thinking about it every day

00:48:06.820 | and I just don't, I'm not confident enough

00:48:08.620 | to say what it looks like.

00:48:09.580 | I'm trying to warn you of what could happen months from now.

00:48:13.340 | I'm trying to warn you of what could happen months from now

00:48:15.620 | and give you the things to watch.

00:48:17.260 | As I did with the virus, I've said, look for these things.

00:48:19.900 | If you see these things happening, it's serious.

00:48:22.220 | If you see these things not happening, it's not serious.

00:48:25.900 | Well, a lot of the things happened,

00:48:28.100 | started to get pretty serious.

00:48:29.800 | Now, we have a chance for the measures to work.

00:48:34.640 | The social isolation, it can work.

00:48:38.740 | But in the very base situation,

00:48:41.660 | the very best case scenario,

00:48:44.940 | when social isolation works, it's economically devastating.

00:48:48.300 | So now I'm saying the same thing, economically.

00:48:52.120 | There are some things that are gonna be done

00:48:54.580 | the next few weeks.

00:48:55.920 | Could they work?

00:48:57.460 | Maybe for the short term, they might work.

00:49:01.140 | If they do work for the short term,

00:49:02.900 | they're going to create much bigger problems

00:49:04.660 | for the long term.

00:49:05.560 | If they work for the short term,

00:49:10.100 | they're going to create much bigger problems

00:49:12.300 | for the long term.

00:49:13.660 | That was the lesson from many people from 2008.

00:49:16.900 | It worked for the short term,

00:49:18.260 | and it created much bigger problems for the long term.

00:49:21.500 | For years, I have been persuaded that the next recession

00:49:25.380 | was going to be more difficult

00:49:27.020 | because of what happened last time.

00:49:29.780 | And I think you see left, right, and center,

00:49:31.560 | if you look around the news,

00:49:32.460 | you see right now the moral hazard that was created

00:49:35.600 | from the previous event.

00:49:41.460 | You see that moral hazard that was created,

00:49:44.100 | and you can see how fast

00:49:47.220 | we've gone immediately to give away free money.

00:49:50.980 | You can see how fast all the companies

00:49:53.740 | came begging for a bailout.

00:49:55.140 | You can see how fast,

00:49:58.660 | Paul just said, "We'll bail you out, we'll bail you out.

00:50:00.180 | "We've got plenty of money."

00:50:01.580 | You cannot just make this stuff up.

00:50:05.740 | You can make this stuff up for a little while,

00:50:07.260 | but you can't do it forever.

00:50:10.400 | If you could do it forever, and this is an event,

00:50:13.240 | if you can just make it up,

00:50:14.500 | then why not make it up with more?

00:50:16.440 | Why talk about $1,000 a month?

00:50:18.120 | It's interesting.

00:50:18.960 | Andrew Yang, his signature series.

00:50:21.080 | Now all of a sudden, everybody just wants to steal

00:50:23.220 | Andrew Yang's UBI idea.

00:50:25.040 | If you can send everyone $1,000 a month,

00:50:26.560 | why not send everyone 10,000?

00:50:28.600 | And hey, I mean, 10,000, I can live okay on 10,000,

00:50:32.020 | but if you can send everyone $1,000 a month,

00:50:34.120 | and you can send everyone $10,000 a month,

00:50:35.600 | why not $50,000 a month?

00:50:39.120 | And the answer to that question is obvious to you,

00:50:43.680 | but you don't want to accept it any more than I do.

00:50:46.240 | The answer is you can't.

00:50:49.000 | And because you can't,

00:50:52.500 | you know that this current charade,

00:50:56.180 | it cannot continue indefinitely.

00:50:59.280 | Now what I have always hoped for is a slow economic crisis,

00:51:07.280 | a slow economic collapse, a slow adjustment,

00:51:12.040 | because that gives time for people to adjust.

00:51:14.420 | I still think that's possible.

00:51:20.600 | You don't have to have a massive all of a sudden collapse.

00:51:23.580 | You don't have to have a massive all of a sudden crisis.

00:51:26.800 | But when you look around at the speed of change

00:51:28.740 | of the last two weeks,

00:51:30.100 | you can see certainly that it's very possible

00:51:37.180 | that things can happen faster.

00:51:38.800 | I got to end today's show.

00:51:45.760 | I got to go work with some clients and make some money.

00:51:48.520 | But I want you to be cautious.

00:51:53.080 | I want you to be looking around,

00:51:54.680 | and I want you to be more pessimistic than most other people.

00:51:58.640 | There's no reason to be scared.

00:52:01.400 | At the end of the day, you're going to be fine.

00:52:03.960 | Even if you lose all your money, you're going to be fine.

00:52:05.760 | Even if you go bankrupt, you're going to be fine.

00:52:07.860 | If you can keep your family together, you're going to be fine.

00:52:10.860 | I took a shower this morning,

00:52:11.820 | I sat there and I pondered bankruptcy.

00:52:13.740 | And I thought, okay, I'll go bankrupt.

00:52:15.380 | All my money becomes worthless.

00:52:16.500 | What do I do?

00:52:17.900 | I'm going to be fine.

00:52:19.300 | You are too.

00:52:20.140 | I don't have perfect answers on everything.

00:52:23.420 | You can work your way through it.

00:52:25.820 | One of the things I have learned by studying

00:52:27.940 | and seeing real collapses

00:52:30.820 | is that life looks surprisingly similar post-collapse

00:52:35.820 | as to how it looks now, pre-collapse.

00:52:39.680 | I hope I've been clear.

00:52:42.320 | I'm not predicting that in one week,

00:52:43.740 | there's going to be a collapse

00:52:44.600 | in the United States of America.

00:52:45.720 | I'm saying these are very serious systemic problems,

00:52:49.100 | and there's no good solution.

00:52:52.560 | The only good solution

00:52:56.160 | is the one that is politically unfeasible.

00:52:59.620 | The good solution is you let bankruptcy happen.

00:53:04.100 | You fight the virus with everything that you can,

00:53:09.280 | with the measures that are being put in place.

00:53:12.320 | Then you let bankruptcy happen.

00:53:15.920 | You let individuals go bankrupt.

00:53:18.280 | That individual that goes bankrupt

00:53:20.040 | allows them to start afresh.

00:53:22.240 | You let the companies go bankrupt.

00:53:24.180 | That lets them start afresh.

00:53:25.900 | You let people learn from the fact

00:53:28.040 | that I should not have lived so close to the edge.

00:53:29.940 | I should have saved more money,

00:53:31.080 | because what happened was I lost one paycheck

00:53:34.060 | because I worked at a gym,

00:53:35.500 | and I lost my job because the gym shut down,

00:53:37.260 | or I lost one paycheck

00:53:39.020 | because I worked at a restaurant,

00:53:39.960 | and the restaurant shut down,

00:53:41.420 | or I lost two paychecks,

00:53:42.560 | and then all of a sudden everything fell apart.

00:53:44.920 | You let people go bankrupt,

00:53:47.840 | and as painful as that is,

00:53:49.200 | bankruptcy clears the slate,

00:53:51.120 | and it's the proper morally right thing to do.

00:53:54.760 | The creditors hurt,

00:53:57.040 | so you let people and businesses go bankrupt.

00:54:01.760 | You let their assets be purchased,

00:54:03.800 | be taken by the creditors.

00:54:05.000 | You let their assets be purchased,

00:54:06.120 | and you let them start again,

00:54:07.200 | and that cleans out,

00:54:08.720 | and then that pain creates a different culture,

00:54:12.840 | a different person who's much more attuned

00:54:15.360 | to the dangers of over-leverage.

00:54:17.380 | There are a lot of people who've gone bankrupt

00:54:20.760 | that vowed, "This ain't gonna happen again,

00:54:23.160 | "and from now on I'm gonna be conservative."

00:54:25.480 | And then you have a conservative culture.

00:54:26.960 | There are cultures that are very fiscally conservative.

00:54:29.920 | The US American culture is not that,

00:54:32.180 | but there are cultures that are very fiscally conservative.

00:54:35.080 | When you have a fiscally conservative culture,

00:54:37.600 | just take as an example,

00:54:39.440 | most American households spend more than they make.

00:54:41.960 | Seems that way.

00:54:42.820 | Let's say that you have a culture

00:54:45.920 | where people spend traditionally half of what they make.

00:54:49.340 | Well, this creates a radically different culture

00:54:51.440 | when you have times of economic hardship,

00:54:54.160 | where people have a 20% cut in their income,

00:54:55.860 | they can absorb it.

00:54:57.040 | They have a 30% cut in their income, they can absorb it.

00:54:59.800 | This is what is necessary,

00:55:03.000 | is you have to have a culture like that

00:55:04.520 | to have a culture that is sustainable.

00:55:06.800 | And you can see this in nature itself.

00:55:09.320 | Let's say that you,

00:55:10.320 | I hope I've got to finish the show.

00:55:13.440 | Let's just look at nature.

00:55:16.080 | Okay, what is the major problem

00:55:18.120 | with most modern monocrop farming?

00:55:21.360 | What happens is you have

00:55:23.100 | no fundamental biological diversity,

00:55:25.200 | and thus you have no real biological resiliency.

00:55:29.040 | You have one crop that you grow.

00:55:31.920 | And so if you have one pest

00:55:33.680 | that successfully attacks that crop,

00:55:35.660 | your crop is wiped out.

00:55:37.600 | You have one crop that you grow,

00:55:38.800 | and if a flood comes in,

00:55:40.000 | your crop is wiped out and your year is ruined.

00:55:42.440 | You don't have a diverse anti-fragile farm

00:55:45.560 | when you have a monocrop farm.

00:55:48.360 | Now, if you go, and the best example I would say,

00:55:50.040 | if you go and look at someone,

00:55:52.000 | I don't know, a permaculture designer

00:55:53.420 | like Ben Falk in the United States,

00:55:54.960 | or you go and you look at,

00:55:56.260 | my favorite was Jeff Lawton

00:55:59.320 | did a review of a tour of his property

00:56:01.960 | during the bushfires recently in Australia.

00:56:05.080 | If you think like a permaculture designer

00:56:07.040 | and you design a system

00:56:08.720 | that acknowledges that many things can go wrong,

00:56:11.120 | and you design a system that has a polycrop system,

00:56:15.280 | you have a diversity of crops,

00:56:16.760 | you have a diversity of animals,

00:56:18.280 | you even plan for a diversity of climate zones, right?

00:56:20.660 | You don't know if the climate's gonna get warmer

00:56:22.400 | or if the climate's gonna get cooler.

00:56:23.900 | So you plant the most of your crops

00:56:26.360 | for your current climate zone,

00:56:28.000 | but then you plant some crops that will flourish

00:56:29.960 | if your climate gets hotter,

00:56:31.520 | and you plant some crops that will flourish

00:56:33.000 | if your climate gets cooler.

00:56:34.400 | You plan water management,

00:56:36.840 | you plan the ability to flood your property,

00:56:38.760 | you plan ahead for fire.

00:56:39.740 | Now, we do this in some ways in modern systems.

00:56:43.240 | So why do you have fire sprinklers required by code

00:56:46.040 | in most modern buildings?

00:56:47.240 | Because people know that works.

00:56:48.860 | Why do you have so much redundancy

00:56:50.120 | and you have smoke detectors

00:56:51.160 | and you have modern electrical codes

00:56:53.500 | and in South Florida, you have these crazy building codes?

00:56:58.000 | Well, it's because people know hurricanes come,

00:57:00.400 | fires come, wires short,

00:57:03.040 | and so you need all of these stopgaps,

00:57:05.480 | you need ground fault interrupt boxes in the wall,

00:57:10.480 | you need circuit breakers,

00:57:11.860 | and these are incredible technologies.

00:57:13.960 | But now when you come to finances,

00:57:15.720 | where is that?

00:57:17.920 | What is it?

00:57:21.980 | It's the stuff that we talk about on the show all the time.

00:57:23.980 | It gives you circuit breakers, it gives you options,

00:57:27.180 | but that's not popularly accepted.

00:57:32.180 | That's not culturally prominent.

00:57:33.820 | It could be.

00:57:34.940 | There's no reason why you can't have a culture

00:57:38.260 | that thrives on that.

00:57:40.380 | But you have the mess of the ridiculously fragile

00:57:43.260 | modern system in the United States.

00:57:45.860 | You have such a mess that,

00:57:48.620 | it means that you have to consider

00:57:50.460 | some very severe scenarios

00:57:51.860 | when you start to face a significant event like a virus.

00:57:56.220 | Everyone's invested in stocks, 100%.

00:58:02.420 | In closing, I would say this.

00:58:09.180 | There are very choppy waters ahead.

00:58:17.820 | Economically, fiscally, and monetarily.

00:58:22.820 | Choppy waters don't necessarily mean capsizing.

00:58:26.420 | Choppy waters don't necessarily mean

00:58:28.740 | that everyone goes under.

00:58:30.660 | It's possible that the solutions will work.

00:58:33.180 | I'm hoping for a best case scenario.

00:58:35.180 | Best case scenario is already pretty tough.

00:58:38.460 | So I'm trying to give you the things to look for

00:58:41.660 | so that you can kind of see what's gonna happen.

00:58:45.980 | I don't know what this means in your personal finances,

00:58:48.300 | but if you have the ability, you see choppy waters ahead,

00:58:51.100 | consider rowing over to the shore, parking your boat,

00:58:54.820 | kind of getting out and pursuing it on foot,

00:58:57.660 | taking a look, just sitting and waiting.

00:59:00.700 | Times of economic crisis are times of opportunity.

00:59:06.660 | In the middle of an economic crisis,

00:59:08.220 | you'll have the opportunity to make wise investments.

00:59:11.860 | You have the opportunity to make a lot of money.

00:59:14.060 | To make wise investments.

00:59:15.580 | You have the opportunity to start new businesses.

00:59:17.660 | You'll have the opportunity to do those things,

00:59:19.380 | but you need to be prepared to do them.

00:59:21.340 | If there's something that you know you should have done

00:59:25.940 | to prepare that you haven't done, do it.

00:59:28.140 | Pull the boat over to the side of the river,

00:59:32.060 | tie off on the tree, and just wait.

00:59:34.420 | Take a look and see.

00:59:37.140 | I don't know what that is for you, but take a look and see.

00:59:42.140 | There are going to be opportunities through this.

00:59:44.580 | You can use this crisis for your benefit.

00:59:48.980 | Even if the only benefit that comes out of it

00:59:52.540 | is you realized how exposed you are as an individual

00:59:55.460 | or how exposed you are as a family,

00:59:57.340 | and in the future, you're more conservative,

01:00:00.300 | more thoughtful, and make a plan to be less exposed,

01:00:03.140 | that's good.

01:00:03.980 | I hope that from now on,

01:00:07.900 | there are people who look around and say,

01:00:09.500 | "I'm never gonna have less than a month's supply

01:00:11.580 | of toilet paper in my house."

01:00:13.340 | Because if you can have that be the cultural norm,

01:00:18.060 | if 80% of the people always have a month's supply

01:00:22.060 | of toilet paper in their house,

01:00:24.700 | then there won't be a toilet paper crisis in the future,

01:00:26.960 | because those 20% can go out and get toilet paper

01:00:29.620 | all of a sudden 'cause they're scared,

01:00:31.260 | and the 80% just sit back and rest.

01:00:33.740 | And the system, the supply chain, can then keep up.

01:00:36.540 | Same thing financially, same thing at every level.

01:00:41.100 | As you create an anti-fragile system,

01:00:42.960 | you create a system that has resiliency.

01:00:46.140 | I could give example after example

01:00:52.540 | after example of resiliency.

01:00:53.660 | We could do it biologically, we could do it ecologically,

01:00:56.380 | we could do it financially, we could do it in every area,

01:00:58.540 | but I'm done.

01:00:59.900 | Just think about it.

01:01:00.940 | What does it take to create resiliency?

01:01:03.220 | At the very least, look around and say, "What do I need?"

01:01:06.620 | What I'm doing is I'm making lists and saying,

01:01:08.740 | "All right, I thought I was pretty well-prepared.

01:01:11.300 | This has proceeded.

01:01:12.580 | I always thought this was a worst-case scenario,

01:01:14.340 | and it's proceeding according to that.

01:01:16.620 | What do I really wish I'd done?"

01:01:18.620 | Simple example.

01:01:19.820 | "All right, I wish I had some gas masks.

01:01:21.980 | I've always thought, 'Meh, come on, gas masks.'

01:01:25.300 | A little bit of an overreaction.

01:01:26.740 | I've never even seen a gas mask other than in a movie.

01:01:29.980 | And so, too much."

01:01:33.420 | But at this point in time,

01:01:34.940 | if I were going to the supermarket,

01:01:37.980 | I'd be happy to wear a gas mask.

01:01:40.380 | I've got some respirators,

01:01:41.460 | I've got some masks and things like that,

01:01:43.420 | but a gas mask is basically perfect protection.

01:01:46.700 | And you know what?

01:01:47.540 | You could buy gas masks for,

01:01:49.380 | you know, masks and some extra filters, a few hundred bucks.

01:01:52.020 | I always thought the people who stocked gas masks,

01:01:53.900 | "Eh, a little bit extra, a little crazy,

01:01:55.340 | a little bit too extreme.

01:01:57.860 | Wish I had some gas masks."

01:01:59.860 | So what is that for you?

01:02:01.220 | At the very least, learn the lessons,

01:02:02.420 | and let's hope that, right, let's hope this all works.

01:02:05.740 | Let's hope we find some solutions,

01:02:06.940 | hope we beat back the virus,

01:02:08.340 | hope we just have some, you know,

01:02:09.780 | tens of thousands of people dead and not millions.

01:02:12.540 | Hope that economically it's a short term.

01:02:15.180 | But meanwhile, look ahead

01:02:17.700 | and think about what you would do at each stage.

01:02:20.460 | What are your triggers?

01:02:22.020 | What do you see?

01:02:22.860 | There are some serious problems.

01:02:26.140 | If those problems are limited to simply more debt

01:02:29.100 | at the federal level,

01:02:32.020 | and some bailouts and some things that get monetized,

01:02:35.620 | some assets get purchased by the Federal Reserve,

01:02:37.820 | and those problems are simply that people have some money

01:02:40.500 | and have some short term hard times,

01:02:42.820 | get through a few months, man, am I gonna be thankful?

01:02:45.620 | But even in that, I wanna emphasize

01:02:49.140 | that's going to create more structural problems

01:02:51.980 | for the future, and at some point,

01:02:53.900 | those bills have to get paid in some way,

01:02:56.640 | usually through bankruptcy of some kind.

01:03:03.140 | This is a time where people will really shine.

01:03:05.700 | I'm so encouraged to see,

01:03:07.500 | I loved that story that came out of Italy

01:03:09.180 | where they ran out of valves for ventilator machines

01:03:11.900 | or something like that, and somebody brought a 3D printer

01:03:14.460 | and started printing valves for them.

01:03:16.260 | I'm thrilled by what you see.

01:03:18.060 | Times that are hard can bring out incredible,

01:03:21.060 | just goodness and solidarity and love from people.

01:03:24.980 | And so I'm thrilled to see that.

01:03:28.100 | It can also be very, very difficult.

01:03:29.500 | I'll give you an example.

01:03:30.340 | One of the areas where I've been beefing up

01:03:32.340 | my own preparations is just in home security right now.

01:03:35.960 | Home security is very concerning,

01:03:38.380 | and security risks always increase in a financial crisis,

01:03:41.980 | and right now, you have all over the country,

01:03:45.940 | you have police departments saying

01:03:47.580 | that they're not going to be able to respond

01:03:49.780 | to unsignificant or less significant crimes,

01:03:53.220 | and so there's a percentage of the population

01:03:55.340 | that is going to be stimulated in this

01:03:58.060 | to go out and do more.

01:03:59.580 | Here is from the city of Philadelphia.

01:04:02.340 | The city of Philadelphia has updated its posture

01:04:04.300 | concerning the COVID-19 pandemic.

01:04:06.140 | Public release, beginning today, March 17, 2020.

01:04:09.060 | That was yesterday.

01:04:10.120 | The city is suspending all public-facing services.

01:04:12.700 | To that end, most municipal buildings

01:04:14.220 | will be closed to the public as the city tries

01:04:15.860 | to limit the potential for exposure

01:04:17.200 | to COVID-19 patrol districts.

01:04:19.300 | Not going on here.

01:04:20.580 | Listen to this.

01:04:21.620 | Effective Tuesday, March 17, 2020,

01:04:24.540 | at the start of the 4 p.m. to 12 a.m. tour,

01:04:26.980 | arrests for the following offenses

01:04:28.780 | will be effectuated via arrest warrant.

01:04:31.140 | All narcotics offenses, theft from persons,

01:04:34.820 | retail theft, theft from auto, burglary, vandalism,

01:04:37.380 | all bench warrants, stolen auto,

01:04:38.620 | economic crimes, bad checks, fraud, prostitution.

01:04:41.780 | Officers who encounter persons who would ordinarily

01:04:44.220 | be arrested for these offenses and processed

01:04:46.300 | at a detective division immediately following arrest

01:04:49.440 | will adhere to the following procedures.

01:04:51.700 | Temporarily detain the offender for the length of time

01:04:53.900 | required to confirm identity.

01:04:55.840 | This may require the deployment

01:04:56.980 | of mobile fingerprint scanners.

01:04:58.580 | Prepare all relevant paperwork.

01:05:00.540 | Release the offender.

01:05:01.680 | Submit all paperwork to the detective division

01:05:03.660 | of occurrence.

01:05:05.580 | So you see this in Philadelphia.

01:05:07.380 | You see this in New York City changes.

01:05:09.820 | You see this in Portland, Oregon.

01:05:11.420 | You see this in Lansing, Michigan.

01:05:12.620 | You're gonna see this all over the place.

01:05:14.260 | So one of the things, if you're proactive

01:05:15.740 | and forward-thinking, you need to be significantly

01:05:17.860 | considering your security plans.

01:05:19.540 | There may be a run on toilet paper,

01:05:21.780 | but there's probably still plenty

01:05:23.160 | of surveillance cameras available.

01:05:25.340 | There's probably still plenty of motion detector lights

01:05:28.760 | available that you can order and you can set up

01:05:30.600 | to improve your security plans.

01:05:32.320 | Don't sit back and wait for that to be the next run.

01:05:35.820 | Prepare accordingly.

01:05:37.460 | Thank you all for listening.

01:05:38.300 | I gotta go.

01:05:39.460 | Few things to close as I announce in closing.

01:05:43.280 | Number one is I'm still doing consulting work.

01:05:46.320 | If you would like to do consultations

01:05:48.240 | on personal financial movements,

01:05:50.200 | I'm running a March Madness sale.

01:05:52.460 | Discounted my normal rate from $400 to $250 an hour.

01:05:55.660 | If you book with code March Madness,

01:05:57.340 | March Madness have canceled, but my sale was not.

01:05:59.960 | If you were interested in that, email me,

01:06:01.360 | joshua@radicalpersonalfinance.com,

01:06:02.940 | and I'll give you details on my private consulting services.

01:06:05.760 | Joshua@radicalpersonalfinance.com.

01:06:08.720 | Number two is I still am running,

01:06:11.240 | I have a number of courses available.

01:06:13.180 | You can find probably the most useful course

01:06:15.560 | at radicalpreparedness.com.

01:06:16.940 | That's one of the cheapest courses.

01:06:18.680 | I started that back in January when I was concerned,

01:06:20.480 | especially about the virus.

01:06:21.480 | And I said, I gotta get a basic

01:06:22.520 | family preparedness course going.

01:06:24.160 | 29 bucks at radicalpreparedness.com.

01:06:26.200 | You can still join there.

01:06:27.240 | The classes are archived.

01:06:28.680 | And then we still have more live classes coming out.

01:06:31.320 | So join me there at radicalpreparedness.com.

01:06:33.560 | And then go to radicalpersonalfinance.com/store.

01:06:36.200 | And if you have not taken my economic crisis course,

01:06:38.560 | you should do that.

01:06:39.600 | Because the strategies that I have talked about in that

01:06:44.080 | are absolutely strong,

01:06:47.160 | and they seem more important than ever.

01:06:49.760 | And there's still time to prepare.

01:06:51.920 | There's still time to prepare.

01:06:53.120 | Not for being quarantined in your house for two weeks.

01:06:55.960 | That's done.

01:06:56.880 | But there's still time to prepare financially

01:06:58.320 | because all these things take time to work out.

01:07:00.780 | So go and check out my how to survive and thrive

01:07:02.760 | during the coming economic crisis course.

01:07:04.800 | The strategies in that course are sound,

01:07:08.360 | and they are things that I am doing to prepare.

01:07:11.480 | I've done them, and I'm doing them.

01:07:13.440 | I'm gonna be posting a special live Q&A

01:07:15.640 | for the students of that course soon.

01:07:17.200 | We'll talk about some of those monetary strategies,

01:07:19.840 | especially in light of the current events.

01:07:21.240 | So go to radicalpersonalfinance.com/store

01:07:23.480 | and sign up there.

01:07:24.520 | In fact, you know what?

01:07:27.280 | I'm gonna host a sale on that.

01:07:29.240 | And so the coupon code is going to be coronavirus.

01:07:34.240 | I will give a 20% discount on all of my courses

01:07:38.040 | through the end of March using coupon code coronavirus.

01:07:45.160 | All one word, coronavirus, as a coupon code.

01:07:47.960 | 20% off all my courses available

01:07:49.440 | at radicalpersonalfinance.com/store

01:07:51.800 | using coupon code coronavirus.

01:07:54.240 | Thank you for listening.

01:07:56.160 | - When you're in winter's favorite town,

01:07:58.160 | the snow-covered mountains surround you.

01:08:02.900 | A historic main street charms you.

01:08:07.660 | And every day brings a new adventure.

01:08:13.740 | (wind whooshing)

01:08:15.980 | Welcome to Park City, Utah,

01:08:18.180 | naturally winter's favorite town.

01:08:20.620 | (sighs)

01:08:22.300 | Join the experience at visitparkcity.com.

RPF0708-Understanding_the_Rough_Economic_Fiscal__Monetary_Waters_Ahead