RPF0710-Friday_QA-Please_Listen_SERIOUS_Financial_Concerns_Discussed_

00:00:00.000 | Today on Radical Personal Finance, it's live Q&A.

00:00:19.360 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:22.280 | skills, insight, and encouragement you need to live a rich and meaningful life now, while

00:00:26.400 | building a plan for financial freedom in 10 years or less.

00:00:30.160 | I might have to change that.

00:00:31.160 | It's a tough time.

00:00:32.160 | Who knows?

00:00:33.160 | Actually, you know what?

00:00:34.160 | Let's keep a good attitude.

00:00:35.160 | Let's talk about how to build financial freedom in 10 years or less, even in the midst of

00:00:38.240 | where we are right now.

00:00:40.340 | Live Q&A show today.

00:00:41.340 | A bunch of callers on the line.

00:00:42.340 | It's going to be interesting.

00:00:43.340 | If you're new to Radical Personal Finance, welcome, welcome, welcome.

00:00:53.860 | Every Friday that I can arrange the technology where I can arrange to be on a stable internet

00:00:57.280 | connection and host a live Q&A call.

00:01:00.060 | Every Friday that I can do that, I host a live Q&A call.

00:01:03.980 | These calls are open to patrons of the show, those who support the show on Patreon.

00:01:07.720 | If you would like to do that, go to patreon.com/radicalpersonalfinance and sign up to support the show there.

00:01:13.560 | Patreon.com/radicalpersonalfinance.

00:01:14.560 | I don't want to waste any time today, so we're going to begin with Justin in Chicago.

00:01:18.240 | Justin, welcome.

00:01:19.240 | How can I serve you today, sir?

00:01:20.240 | Hey, Joshua.

00:01:21.240 | Sorry about that.

00:01:22.240 | No problem.

00:01:23.240 | You're live.

00:01:24.240 | I had two questions for you.

00:01:25.240 | The first one is I have a family member who is currently in Costa Rica, trying to come

00:01:34.240 | back, I think tomorrow, and that's been canceled.

00:01:37.240 | So now trying to get flights out later this week.

00:01:40.240 | I was just going to see if you had any thoughts on should she have tried to come home early

00:01:44.840 | amidst the news?

00:01:45.840 | Do you think she should stay put and try to make accommodations there?

00:01:48.440 | Is she living in Costa Rica or is she just simply traveling in Costa Rica on a short

00:01:52.760 | term?

00:01:53.760 | She went for a one-week trip, kind of in the middle of all this.

00:01:56.800 | And why was the flight canceled?

00:01:58.040 | Why couldn't she get out?

00:01:59.040 | I'm not sure why the first flight was canceled.

00:02:00.040 | It may have been like an availability thing.

00:02:01.040 | I'm not exactly sure, but the flight she was supposed to come back on was canceled.

00:02:08.080 | Has the airline rebooked her?

00:02:09.560 | Yeah, she's been rescheduled to another flight.

00:02:13.440 | So what's the problem then?

00:02:15.640 | Why shouldn't she just take the flight?

00:02:17.000 | So I guess mainly I was curious because she's recovering from illness and is in her 60s.

00:02:25.640 | So I was thinking about just trying to avoid contact with folks.

00:02:28.280 | Well, there's not really an option for her.

00:02:30.560 | If she was living in Costa Rica or she had friends in Costa Rica, then of course she

00:02:34.240 | could stay in Costa Rica.

00:02:35.400 | But Central America, just like almost anywhere, is shut down.

00:02:39.520 | So she has three ways to get from Costa Rica to the United States.

00:02:43.900 | She can fly, she can drive, or she can take a boat.

00:02:49.160 | She ain't going to drive.

00:02:50.240 | All the borders are closed.

00:02:52.320 | Mexico-US border is now closed.

00:02:54.440 | Of course, if she's a US citizen, she could get in that one.

00:02:57.120 | But I don't know if the Mexican border is closed right now, but Honduras is closed.

00:03:01.360 | El Salvador is closed.

00:03:03.400 | Guatemala is closed.

00:03:04.800 | Costa Rica is closed.

00:03:08.000 | Costa Rica would let her out, but Costa Rica is closed.

00:03:10.400 | Panama is closed.

00:03:12.480 | Panama is canceling all flights, all international flights on Sunday.

00:03:17.880 | So she's not – generally, of course, she could drive up, but too late for that.

00:03:22.720 | And so her only options are to fly or to take a boat.

00:03:25.880 | There's no practical boat scenario, and so I think she has no choice but to fly.

00:03:30.140 | So if she's been sick, if she has coronavirus or has the symptoms of it, then obviously

00:03:36.680 | she owes it to her fellow passengers to not fly to get treatment until she recovers, and

00:03:42.000 | she can do that in Costa Rica.

00:03:43.840 | But if she just has a cold or something like that, then have her wear and acquire a mask

00:03:49.520 | to protect her fellow passengers, to maintain distance, but I don't see any option that

00:03:53.320 | she has but to get home.

00:03:55.800 | I don't see any other choice for her at this point.

00:03:57.680 | All right, awesome.

00:03:59.200 | Thanks so much.

00:04:01.240 | Any other questions before you go?

00:04:02.240 | I know I've got a date for you.

00:04:04.320 | Okay, great.

00:04:05.320 | All right, we move on to – looks like Pennsylvania.

00:04:08.440 | Welcome to the show.

00:04:09.440 | How can I serve you today?

00:04:10.440 | Hey there, Joshua.

00:04:11.440 | This is a guy in Pennsylvania.

00:04:12.440 | Good to talk to you, sir.

00:04:13.440 | You too, sir.

00:04:14.440 | Go ahead.

00:04:15.440 | I have a simple tax return question, and the question is where you would best suggest that

00:04:25.400 | I would put these funds.

00:04:27.400 | My wife and I have been talking about it for a few weeks now.

00:04:31.160 | We were talking about this before everything has happened with coronavirus, and now I think

00:04:36.440 | this probably changes the conversation a little bit.

00:04:38.640 | So essentially, just to kind of outline where we're at, we're in ministry, so I'm employed

00:04:45.480 | at a church, and she is a freelance writer, very minimal.

00:04:51.840 | She makes about $500 a month.

00:04:56.080 | And so I look at our income as, especially in times like these, as fairly high risk,

00:05:02.240 | because if the community stops making income, the church stops making income, I stop making

00:05:06.040 | income.

00:05:07.040 | So I have a tax return coming.

00:05:10.040 | We are, as a family, we are debt-free except for our mortgage.

00:05:14.760 | We have an $86,000 mortgage.

00:05:17.560 | And with this $7,000 tax return coming, we're married with three small children, four, two,

00:05:22.520 | and one.

00:05:24.320 | And where we've been discussing is whether or not those funds should go into our emergency

00:05:29.600 | cash savings to beef that up, or if they should go towards paying off our mortgage faster

00:05:35.240 | or towards what we consider our Kids' Future Fund, which is where we're saving for things

00:05:42.000 | like college or whatever else may come up, but it's not in a 529 or anything like that.

00:05:47.800 | So I just kind of wanted a little bit of your guidance on what you would suggest.

00:05:54.000 | At the moment, our income is going to continue to come in.

00:05:57.400 | You know, I'm still working.

00:05:59.520 | Our church is moving online, things like that.

00:06:02.760 | We have $4,500 in our emergency preparedness fund right now.

00:06:09.480 | $3,000 of that is in a money market account, and $1,000, $1,500 of that is in $50 bills

00:06:17.960 | in the gun safe.

00:06:20.040 | So we have that cash on hand.

00:06:21.760 | So I just kind of wanted to feel you out for what your thoughts and what your suggestions

00:06:26.080 | were on where we should launch that money.

00:06:28.640 | If I were in your shoes, I would go to the ATM and I would withdraw the $3,500 from the

00:06:38.440 | money market account.

00:06:39.640 | I would add that and $50 and $20 bills to the money that's in my gun safe, and when

00:06:44.440 | I receive the $7,000 tax refund, I would take that to the bank and I would turn it into

00:06:50.480 | physical currency.

00:06:52.720 | I hope that that's overreacting.

00:06:55.400 | I hope that that is unnecessary, but at this point in time, my concern grows day by day,

00:07:01.760 | and I don't see, except unless we have some miracle treatment that proves to be effective.

00:07:08.840 | For example, in the last couple of days, there's a lot of excitement about chloroquine and

00:07:13.200 | other treatments, and I think that's great.

00:07:14.840 | If some miracle treatment comes out in the next few days, I will be thrilled with that,

00:07:22.600 | but barring that, I see no reason not to do what I've just said.

00:07:31.760 | That's what I would do.

00:07:32.760 | >>Trevor: So your recommendation is to up my cash on hand to around $10,000, and had

00:07:42.440 | we not been in this scenario, would you suggest any differently?

00:07:45.200 | I've listened to a lot of your episodes where you're suggesting more cash on hand than I

00:07:49.000 | have.

00:07:50.000 | >>Dave: Had we not been in this scenario, would I have suggested differently?

00:07:52.400 | Probably, a little bit, but I would have thought about the other options.

00:07:57.880 | I would have worked it through.

00:07:59.440 | I would have considered the benefits and the drawbacks, et cetera, and I probably would

00:08:05.200 | have arrived at a similar conclusion.

00:08:08.820 | If you had a total emergency savings of $12,000, I'd be nervous about all of that $12,000 under

00:08:15.960 | normal situations, no global pandemic.

00:08:19.600 | I'd be a little nervous about all of that $12,000 being in physical cash because that

00:08:27.640 | puts you at risk of a security risk if your safe is broken into, if you have a home fire.

00:08:35.920 | It's too risky to have all your money in cash in that scenario if that represents all of

00:08:39.760 | your savings.

00:08:40.760 | In addition, it's a risk for just simply the administrative complexity of paying bills.

00:08:49.080 | It's very valuable to have digital emergency funds that can be quickly put in a checking

00:08:54.760 | account that you can make an electronic transfer, et cetera.

00:08:58.520 | I would have probably still steered you towards saving it just in emergency funds, not a college

00:09:03.360 | account, not paying extra on your mortgage because I'd rather you have $12,000 being

00:09:08.280 | the father of three children than $5,000.

00:09:12.920 | I probably still would have steered you in that direction.

00:09:15.400 | Of course, in normal times, I would have said, "Spend some of the money.

00:09:18.760 | There's no reason.

00:09:19.760 | Perhaps, there's something that you've been waiting for and maybe an extra $2,000 is spent.

00:09:25.280 | That's reasonable."

00:09:27.280 | But in the current scenario, I would do it as I said.

00:09:33.040 | While you're waiting on that tax refund check, I would go to the bank.

00:09:36.040 | I would make some ATM distributions and I would take out the money that was in my money

00:09:40.480 | market account and turn it into physical currency.

00:09:43.160 | Then when I received the tax refund check, I would also turn that into physical currency.

00:09:47.480 | There's no downside risk to that other than the risk of loss.

00:09:50.600 | So I would diversify it.

00:09:52.680 | Put some in your gun safe and bury some in the backyard or put some at your mom's house

00:09:56.860 | or something like that so that it's not all exposed to the risk of loss, not all exposed

00:10:02.560 | to a house fire, et cetera.

00:10:05.120 | But I think that's where we are and I think that that move at this point in time is clearly

00:10:11.200 | justified.

00:10:12.200 | Okay, I appreciate that.

00:10:15.840 | And then kind of the same thing, if we get that, which it looks like they're going to

00:10:20.240 | pass cash to every American household, kind of handle that in the same way.

00:10:26.280 | You'd suggest or maybe do a little bit of digital beyond that.

00:10:29.320 | I don't mind.

00:10:30.320 | You need some digital money just to pay bills, right?

00:10:32.680 | So if you still have income and whatnot, that's fine.

00:10:35.960 | And I don't want to – I'm trying to figure out how to clearly convey my concern, which

00:10:43.160 | grows day by day.

00:10:45.400 | I have just – prior to this call, I've just spent an hour sitting and talking to

00:10:49.360 | my wife, talking through all the reasons why I'm wrong, all the reasons why I'm overreacting

00:10:53.960 | and the conclusion was that I can't find it.

00:10:56.520 | And when I conclude this Q&A call, I have a significant amount of cash and I'm going

00:11:00.880 | to the bank to withdraw more.

00:11:03.080 | So I hate that.

00:11:05.160 | I hate that we're there, but I'm concerned that within the next few days, those kinds

00:11:11.040 | of things will start to be more apparent and you need to be early.

00:11:18.000 | So if I'm overreacting, I don't see much of a cost to you if I'm overreacting.

00:11:22.440 | I don't have any cost to me if I'm overreacting.

00:11:24.960 | And so that's as clearly as I can say.

00:11:29.000 | Yeah, I appreciate it because they're trying to prevent a run on the bank.

00:11:34.160 | Of course, of course they are.

00:11:35.400 | But the reason they're trying to prevent it is because there's more significant danger

00:11:39.500 | right now than there has ever been.

00:11:42.480 | And again, I'm giving all these disclaimers because I'm uncomfortable publicly acknowledging

00:11:50.640 | that these are my current concerns.

00:11:53.800 | It makes me seem very weird and I don't like that, but these are my concerns.

00:11:58.280 | And so if you go to the bank early and you arrange distribution of physical currency,

00:12:05.140 | you can possibly get your hands on physical currency.

00:12:08.160 | But if you wait until things are more difficult, then there's a good chance they don't.

00:12:16.240 | And so what I have heard from many listeners is first of all, it's just flat out difficult

00:12:22.360 | to get your hands on physical currency in today's world.

00:12:24.940 | There's been an incredible war on cash over the last number of years.

00:12:28.960 | And although I've never done a standalone episode on that, I have all the material,

00:12:32.560 | I've tested myself to see if that's actually true.

00:12:35.120 | Because I used to think that was a conspiracy theory and oh, there's not a war on cash and

00:12:38.840 | I used to take it lightly.

00:12:40.200 | At this point, I'm convinced that it's real, it's true and I've proved it for myself.

00:12:45.920 | And then so it's hard under normal circumstances to get cash out of the bank.

00:12:51.860 | And what I am hearing increasingly is that banks are just like you go through when you

00:12:57.020 | face an emergency, right?

00:12:58.500 | There are a number of different phases to it.

00:13:02.140 | And you can see this with regard to the toilet paper crisis and whatnot right now.

00:13:07.880 | So the first phase is that there's a reason for concern.

00:13:10.720 | If you move before there's a reason for concern, you can stockpile as much of anything as you

00:13:15.880 | want.

00:13:16.880 | And so the secret is always to move before there's a reason for concern.

00:13:21.740 | Six months ago, if you were stockpiling the necessary goods and you wanted to stockpile

00:13:27.220 | toilet paper, you could go to Costco, you could get two or three carts and you could

00:13:31.840 | get as much toilet paper as you wanted.

00:13:34.120 | It was cheap, it was easy and nobody would look at you other than like I wonder why that

00:13:37.860 | guy's getting so much toilet paper but nobody would take a picture of you and post it online

00:13:41.720 | for public excoriation.

00:13:44.260 | That was what you could do six months ago.

00:13:46.140 | Now if you went back in December and January when we first started hearing news of a potential

00:13:53.740 | viral outbreak, it was early, we were seeing news, it had a whistleblower that started

00:13:58.460 | to bring it, people were paying attention.

00:14:00.580 | If you understood the potential contagion of a global viral pandemic, you could go in

00:14:06.180 | January and you could buy toilet paper and you could get three carts worth and there

00:14:09.540 | was no big deal.

00:14:10.540 | You didn't harm anybody else, everything was entirely fine, there was no downside to that

00:14:15.380 | whatsoever.

00:14:16.660 | In February it started to get questionable but if you waited until March and then you

00:14:21.300 | went and did it, now as far as I'm concerned you're engaging in something that is hurting

00:14:25.940 | other people and this is like the difference between the word stockpiling versus hoarding.

00:14:30.500 | I don't like the use of the word hoarding the way that it's usually used.

00:14:37.020 | I don't like it at all because what happens is that I'm not a hoarder if I went six months

00:14:41.740 | ago and purchased a year's supply of toilet paper, I'm simply stockpiling.

00:14:46.500 | No one else is hurt, there's plenty of slack in the supply line, that's just a simple choice,

00:14:51.660 | I'm stockpiling.

00:14:53.180 | Now then they start using the word hoarding and they say well you're hoarding because

00:14:57.660 | now you're taking things and that's making it unavailable to other people and I believe

00:15:02.580 | that you're entirely justified in doing that but that that's not a good expression of love

00:15:08.780 | for your neighbor.

00:15:09.780 | I don't want to take valuable resources in a difficult time away from people who need

00:15:17.260 | them more than I do and so I would not go, if I was going to make an order for masks

00:15:24.540 | six months ago, I could order a thousand masks and just simply have that available for me

00:15:29.780 | and I didn't hurt anybody.

00:15:30.860 | In fact now I would be in a position to give charity because now I could take, if I bought

00:15:34.620 | a thousand masks, obviously I'm being a little bit hyperbolic with these numbers but if I

00:15:38.340 | bought a thousand masks now I could easily take three or four or five hundred of them

00:15:42.260 | and I could take them to my local hospital, I could take them and donate them and really

00:15:46.900 | be helpful and my stockpiling allowed me to be charitable during a time when that charity

00:15:53.020 | is really needed and so that's just good sense.

00:15:56.780 | Now I don't believe that it's a good practice or an ethical moral practice to hoard during

00:16:02.340 | times of shortages, that's not love for neighbor.

00:16:05.300 | And so this is not a time to go out and to hoard those resources but there's a major

00:16:12.660 | difference between stockpiling and hoarding.

00:16:15.260 | So where are we financially?

00:16:16.460 | Why am I concerned about physical currency?

00:16:19.100 | Well if we continue on the current path then next week and the week after we're going to

00:16:24.980 | start to see public concern about banks.

00:16:30.820 | We're going to start to see public concerns about a lot of stuff in the financial supply

00:16:36.180 | and this is the most complex supply chain in the world where you've got the biggest

00:16:40.780 | people involved.

00:16:41.780 | You've got the supply chain of the Federal Reserve controlling the actual supply of money

00:16:47.260 | in the economy.

00:16:48.660 | You've got the big consumers of money, of individuals, of corporations, of governments,

00:16:55.620 | etc. and on a global basis this supply chain is now being tested.

00:17:01.820 | And so what are the stages that people go through?

00:17:06.540 | Well in physical products like toilet paper normally what would happen is as demand rises

00:17:14.820 | then the price would rise and that price would start to adjust the supply.

00:17:19.780 | But of course in the United States and in most countries around the world there are

00:17:24.740 | what are known as price gouging laws which are supposed to keep the prices from changing

00:17:29.700 | in a situation like that.

00:17:31.340 | So instead of the price changing to reflect the increase in demand what happens is the

00:17:36.860 | stores sell the product out very quickly and then they start to have shortages.

00:17:42.700 | Then in order to deal with those shortages in a way that doesn't alienate their customers

00:17:46.580 | which is the first thing that stores should not change prices massively because it alienates

00:17:50.660 | their customers and also in a way that follows the anti-price gouging laws they impose rationing

00:17:56.180 | and that's the next step.

00:17:57.180 | So when you start to see rationing you're a little bit late but when you see rationing

00:18:01.580 | there's probably still time for you to go out and to get your supplies because the supply

00:18:06.300 | is starting to be filled in.

00:18:08.980 | The warehouses are shipping out more toilet paper.

00:18:11.360 | You can go to multiple different stores.

00:18:13.020 | You can get a couple things.

00:18:14.400 | Again we've got an ethical problem there that I think we should be cautious of.

00:18:17.140 | There's no reason to cause unnecessary shortages but practically speaking if you need more

00:18:21.940 | toilet paper you can go and get it when you're in that period of rationing.

00:18:26.140 | So that period of rationing is a very important sign that hey something's going on.

00:18:31.500 | Now that period of rationing can be short term.

00:18:34.580 | It can change and so you want to say why is this being rationed and what's actually going

00:18:39.020 | to happen.

00:18:40.020 | So with cash what I am seeing is first of all cash has been a tightly controlled market

00:18:45.460 | for a long time.

00:18:46.840 | It's a very tightly controlled market and there's a lot of rationing involved.

00:18:51.260 | You cannot generally go on just about any day to your bank and ask for large amounts

00:18:56.100 | of cash.

00:18:57.100 | You have to put an order in and they have to need a day or two to satisfy it.

00:19:00.340 | The amount of physical currency that's available is absolutely tiny compared to the amount

00:19:04.780 | of currency that's in circulation.

00:19:07.700 | So now what you're seeing is you're seeing more and more stress and more and more strain

00:19:11.620 | go onto the banks and so banks are starting to ration their services.

00:19:15.100 | I've received multiple reports from listeners who've shared with me directly that banks

00:19:19.140 | are limiting withdrawals to $3,000.

00:19:23.560 | That's a frequent number that I've heard from multiple listeners that they're limited in

00:19:26.940 | cash withdrawals to $3,000.

00:19:29.900 | That's not a lot of money.

00:19:31.060 | That's really not a lot of money and so that's concerning because that's in addition to other

00:19:40.340 | rationing mechanisms such as just as you think about mechanisms like ATM distribution limits

00:19:48.700 | at $400 and $300, etc.

00:19:52.220 | Now even if you go in and you have $10,000 in your account, the banks are limiting you.

00:19:55.940 | In addition, banks are rationing access to their services.

00:19:59.180 | Many banks are closing down their lobbies and they're leading to you have to do business

00:20:02.900 | with them in the drive-thru, which makes all the sense in the world given a viral outbreak.

00:20:07.380 | Makes all the sense in the world, but I'm also concerned now about even just the access

00:20:13.120 | to money, physical money.

00:20:16.180 | That rationing is a major warning sign to say what's going to happen in the future.

00:20:20.760 | Now the supply chains are still pumping in money.

00:20:23.860 | Every single night the banks are trying to refill their vaults.

00:20:27.780 | The Federal Reserve is getting digital money out.

00:20:30.000 | There's currency that's flowing around to try to meet the demand, but it's possible

00:20:36.820 | that that gets worse.

00:20:39.700 | As the news continues to—as more and more people start to understand where we are and

00:20:43.980 | as more and more people start to understand the financial concern, as these things start

00:20:48.220 | to hit publicly, pit the public awareness, then it could affect it.

00:20:54.460 | What happens is you're not dealing with—when you're dealing with markets, you're dealing

00:20:58.220 | with people and their individual behaviors.

00:21:02.140 | The thing that causes the panic is not necessarily the actual results.

00:21:07.460 | It's not necessarily the actual outcome.

00:21:11.780 | This is why you've seen people arguing about, "Well, the coronavirus is just a flu."

00:21:15.740 | Well, in my mind it's rather obvious that it's not just a flu.

00:21:18.460 | I don't understand how people can still believe that.

00:21:21.940 | It was one thing to say that when you had data out of China that you couldn't be sure

00:21:25.820 | of, but at the moment I don't see how you say that.

00:21:28.100 | But the problem is not that it's just a flu.

00:21:29.940 | There is the medical problem, and then there's the perception of the medical problem.

00:21:34.180 | There's the actual issue, and then there's the human psychology and the panic that ensues.

00:21:38.460 | And so financially you have exactly the same thing.

00:21:40.620 | So what are people who are managing the finances trying to do?

00:21:43.700 | They're trying to solve the actual problem, and then they're trying to manage perception

00:21:47.620 | because the danger is that there is mass panic.

00:21:50.780 | And when there's mass panic, then all of a sudden everything gets out of whack.

00:21:56.280 | And so there's the problem, which people can argue about the problem, but then there's

00:21:59.340 | the reaction to the problem, which is in and of itself a problem.

00:22:02.500 | That's why people are always – medical advisors, even me, I'm trying to balance, okay?

00:22:07.780 | Let me speak into the subject, but also manage the human psychology.

00:22:11.100 | Now thankfully in my case I can speak without – I'm not a government agent.

00:22:13.940 | I don't have responsibility to that.

00:22:16.100 | I just have responsibility to my listeners to give them the best ideas that I have.

00:22:20.320 | But at the moment, financially speaking, over the coming weeks we're in very, very tricky

00:22:27.780 | waters.

00:22:28.900 | And what's going to happen is they're flooding the market with money, and that money is going

00:22:34.180 | to be digital money.

00:22:35.420 | That money is going to be physical money.

00:22:37.660 | But in a contagion of panic, that human psychology can lead to shortages, can lead to major problems.

00:22:44.780 | And that's the kind of thing that can lead to bank collapse.

00:22:48.500 | That's the kind of thing that can lead to freezes.

00:22:51.340 | That's the kind of thing that can lead to all kinds of awful price control laws, currency

00:22:56.920 | control laws, all the stuff that just makes a financial panic awful.

00:23:01.620 | And so that is the fear that is being discussed right now in – that's the fear that's being

00:23:07.100 | discussed right now in every corner of the financial universe.

00:23:11.460 | How do we avoid this?

00:23:12.460 | Now, I'm hopeful that it'll be able to be avoided, and so I don't want to be the cause of panic.

00:23:19.340 | But I also don't want my family to be without toilet paper.

00:23:23.660 | And so when you see something, I think you have to say something, and that's what I'm

00:23:27.140 | doing here.

00:23:28.140 | So that's the background to that, is that as I watch this develop, this is the next

00:23:33.260 | – one of the next big potential events that is going to make things more and more difficult.

00:23:38.220 | >>Steve: Yeah, absolutely.

00:23:40.020 | So based on – so you'd recommend I need to kind of step that cash out.

00:23:45.660 | They're only going to give me so much anyway, so I kind of have to step it out.

00:23:49.300 | >>Steve: Right, right.

00:23:50.300 | >>Adam: Yeah, what I would do – thankfully, $3,000 is a very doable amount.

00:23:54.880 | You can go to your bank, you can get a distribution, you can call them and ask them.

00:23:58.140 | If you haven't, one of the things I always recommend and have for years is that you should

00:24:01.520 | always have high ATM limits on your cards.

00:24:05.840 | This has become more difficult in recent years.

00:24:07.440 | For example, with my bank for many years – and this is back to the war on cash – with my

00:24:11.820 | bank for many years, I was able to institute a standing order for all of my debit cards

00:24:18.160 | that I could – where my ATM – my daily ATM distribution limit was I think $5,500.

00:24:26.320 | I had to do it in writing.

00:24:27.360 | I would give them a written request, but I had on all of my debit cards $5,500 daily

00:24:32.560 | ATM distribution limits.

00:24:34.520 | So I could go to an ATM and I could sit there and the ATM has a limit and then your bank

00:24:39.560 | has a limit for ATM distributions.

00:24:41.680 | But I could go to the ATM, I could sit there and put in my PIN number – let's say it's

00:24:46.480 | $400 – I could put in my PIN number 13 times and get out $5,000 from the ATM without my

00:24:53.080 | bank shutting me down.

00:24:55.080 | Then with multiple accounts, I could do that with multiple cards and multiple accounts

00:25:01.040 | and then I could do that on multiple days.

00:25:05.320 | And so I always had it set up so that if I needed – all of a sudden I look around and

00:25:10.240 | I need cash, whether it's to go and buy an RV because somebody's selling one or

00:25:14.600 | buy a boat or whether it's I need cash because I'm worried about getting access to cash.

00:25:17.960 | I always had it set up so that I could go and I could just from an ATM at 10 o'clock

00:25:22.440 | at night, I could go and I could get $20,000 out because if I have multiple debit cards

00:25:27.360 | with high limits set on those, then I could go to multiple ATMs and I could go get $20,000

00:25:32.120 | out of the bank.

00:25:33.120 | Well, what happened is I think a year or two ago, I lost my debit card and I got a new

00:25:38.960 | debit card.

00:25:40.560 | And then I tried one time to go get money out of the bank and I couldn't get a lot

00:25:44.400 | of money out of the bank and that was really frustrating.

00:25:46.780 | And so I called them and I said, "What's going on?"

00:25:50.440 | I knew from previous experience when I had lost previous debit cards that whenever I

00:25:55.080 | got a new debit card, I had to reinstitute that same policy.

00:25:58.760 | I had a written authorization with the bank but I had to call them and say, "Will you

00:26:06.720 | please go ahead and reference my written authorization that's on file and give me the permanent high

00:26:12.080 | ATM limit on this card?"

00:26:14.280 | So then what I found out with the new card is that they would no longer honor that and

00:26:17.600 | the bank had made a policy change that now I was limited to whatever the stupid $500

00:26:23.680 | or $600 standard thing but I could still contact them on occasion to request a higher ATM distribution

00:26:33.200 | limit.

00:26:34.260 | And so that was just a sign and I said, "This is one of the most valuable things in the

00:26:38.840 | world to me.

00:26:39.840 | What are you doing?"

00:26:40.840 | And they just wouldn't listen to me.

00:26:41.840 | And so I said, "Ah, this is getting worse and worse."

00:26:45.480 | Now every bank is different, right?

00:26:48.160 | There's a big difference between the big monster mega banks and modest size banks and local

00:26:51.200 | credit unions, etc.

00:26:53.440 | But I have watched, you know, year after year I've watched this get even harder.

00:26:58.560 | And so I lost the question I was answering when I was responding to you.

00:27:05.460 | But just, oh, the point was simply that $3,000, you should be able to get that out of the

00:27:08.260 | ATM.

00:27:09.720 | That's doable.

00:27:10.720 | Go to a few ATMs, request a temporary ATM distribution limit if you do that or just

00:27:14.340 | go to the bank and see if they give you the cash.

00:27:16.260 | You don't have a problem.

00:27:17.460 | The person who has the problem is the guy who's got a couple hundred thousand dollars

00:27:20.100 | and he wants to say, "You know, I'd like to pull out $30,000 or $50,000 or $100,000

00:27:24.380 | and put it aside just in case."

00:27:26.860 | That's where things are starting to get tricky.

00:27:28.800 | So I don't think we're right there, but that's going to be the next thing.

00:27:33.320 | And so I'm watching that very carefully over the next couple of weeks and looking for information,

00:27:37.280 | but that's my advice.

00:27:38.280 | >>Trevor: My wife and I have been, since right around October, we've been slowly prepping,

00:27:44.640 | slowly getting fruit stores and things like that in the basement.

00:27:48.440 | We've always been working on emergency funds and we've been debt free for our entire marriage

00:27:53.120 | since 2012.

00:27:54.120 | And we take all this very seriously.

00:27:56.280 | And my wife, I'm taking your radical preparedness course and my wife, she thinks that's all

00:28:06.160 | a good thing.

00:28:07.160 | But it's been kind of neat to see this kind of go on because I think it's almost, God's

00:28:15.160 | timing is amazing.

00:28:16.160 | It's almost prophetic that you're doing this right now, that you have been doing this because

00:28:20.640 | all of this has been theory in our household as we've discussed a lot of what you're talking

00:28:25.560 | about.

00:28:26.560 | And now here we are.

00:28:27.880 | I said, "I wish this happened six months later.

00:28:30.120 | We'd have been so much more prepared for this."

00:28:32.560 | And so my wife actually just this morning, she just, in a stockpiling mentality, not

00:28:38.880 | a hoarding mentality, she just got back from the store and she got extra of everything

00:28:44.720 | so that we can not have to leave for a few weeks if we don't have to.

00:28:48.440 | And she said, "I'm so glad you're taking that."

00:28:51.000 | She's totally on board now.

00:28:53.360 | And you go to the grocery store.

00:28:54.880 | It's a little bit eerie.

00:28:55.880 | I was walking through Alpi and it's quiet, it's empty, the shelves are empty, and somebody's

00:29:01.680 | cell phone started playing the Titanic.

00:29:03.680 | I said, "Oh no, what's happening here?"

00:29:04.680 | I couldn't believe it.

00:29:05.680 | Well, thank you for taking that course.

00:29:06.680 | And even, oh, I cut you off.

00:29:07.680 | Forgive me.

00:29:08.680 | Go ahead.

00:29:09.680 | No, I was just going to say I really appreciate the help.

00:29:10.680 | And I just had just a follow-up thought of, if I do all this cash stuff, then I can, as

00:29:23.520 | long as my income continues, I can just continue my regular plan of saving for kids' futures,

00:29:28.680 | saving to pay off mortgage and all that.

00:29:30.320 | I can stay the course.

00:29:31.320 | Exactly.

00:29:32.320 | Don't have to alter those goals.

00:29:33.320 | Okay?

00:29:34.320 | Exactly.

00:29:35.320 | Yeah, I think, and thank you for taking the course.

00:29:38.200 | I'm glad that it is helpful.

00:29:39.360 | I will tell you this, I am teaching that course, right?

00:29:42.800 | I have paid attention to this for a long time.

00:29:45.000 | I have pages of notes of things that I feel exposed on because I can hardly believe every

00:29:51.240 | day.

00:29:52.240 | I get my normalcy bias every single day.

00:29:54.480 | And I just say, I thought this through, but I always thought, I knew historically that

00:30:00.800 | a global flu pandemic, or global viral pandemic, this is the thing that throughout history

00:30:06.160 | has changed again and again and again, entire civilizations.

00:30:10.480 | The plague changed history.

00:30:13.520 | You can see cholera outbreaks, the Spanish flu, again and again and again, you can see

00:30:18.720 | that this changed civilizations.

00:30:20.920 | Entire civilizations disappear because of infectious disease outbreaks.

00:30:26.880 | You have smallpox outbreaks in the Americas and entire cultures and civilizations disappear.

00:30:33.400 | And so I've always thought that this was a serious threat.

00:30:39.220 | And because of the model of the threat, as I've stated publicly, I've always thought

00:30:43.720 | that this was the hardest thing because it's all the globe all at once.

00:30:48.800 | And especially that's the risk that has always risen, that in the past, it wasn't always

00:30:53.560 | all the globe all at once because people traveled around at a fairly moderate speed, the rate

00:30:58.280 | of that their own feet would take them, the rate that a horse would take them, the rate

00:31:02.360 | that a sailboat would take them.

00:31:04.160 | But now as the speed of travel has increased and we went from horses to trains and trains

00:31:09.320 | to automobiles and then to airplanes, and now people travel around at 24 hours a day,

00:31:15.380 | that has always been the major risk factor for the outbreak of infectious disease because

00:31:20.420 | that speed of movement makes it possible for something to go from one area to the rest

00:31:25.580 | of the world all at once.

00:31:26.860 | Well, that's been compounded and had offsetting benefits to it.

00:31:30.740 | The information also travels and so information travels fast, which leads to a bigger risk

00:31:35.380 | of panic, a bigger risk of the human psychology.

00:31:38.660 | During the Spanish flu, very rarely people knew what they knew from their neighbors and

00:31:43.260 | they knew what they knew from the newspapers, but now I'm tuned into the world flow of information

00:31:49.060 | and so is everybody else.

00:31:50.220 | And so this increases the risk of human reaction and overreaction, human panic, et cetera,

00:31:57.220 | and it makes it even more acute.

00:31:58.760 | Now thankfully there are offsetting factors.

00:32:00.660 | We have massively improved healthcare systems.

00:32:03.500 | We have massively improved treatment systems, massively improved understanding of germs

00:32:09.880 | and viruses, et cetera, and so there are offsetting factors that make things better, but you see

00:32:16.180 | it playing out.

00:32:17.180 | So the point is just simply to say, "Yes, I understand the situation you're in," and

00:32:21.180 | every day I look at it and I think, "Well, I always knew that this was a scenario, but

00:32:25.660 | I didn't know it was going to be quite this difficult."

00:32:31.380 | During your course.

00:32:32.380 | Yeah, exactly.

00:32:34.380 | Yeah, exactly, and so it's one of those things where I keep hoping every day that there'll

00:32:40.040 | be some cure, but I'm like, "Next time it comes, I'm going to be 10 times better prepared

00:32:44.280 | than I am now," because I don't like the impact of it day by day.

00:32:49.880 | I don't like it and I'm in a better situation than most people.

00:32:53.920 | So all right, man.

00:32:54.920 | Guy, thanks for calling in.

00:32:55.920 | I'm going to boogie on.

00:32:56.920 | I've got a bunch of other callers to work with, so thank you very much.

00:32:58.920 | All right, we go now to, looks like Mohamed.

00:33:02.600 | Is that you?

00:33:03.600 | Welcome to the show.

00:33:04.600 | How can I serve you today?

00:33:05.600 | Hi, Josh.

00:33:06.600 | Thank you.

00:33:07.600 | Yes, I've been to the Joshua Sheets University, so I've taken all your courses and I so appreciate

00:33:11.960 | everything you've done.

00:33:12.960 | I'm in a situation where I'm doing telemedicine, so I have my online business right now doing

00:33:18.040 | telemedicine as a physician.

00:33:19.840 | I have a few other online businesses, so I'm in a good financial situation as far as income.

00:33:24.440 | I have a good amount of cash saved up.

00:33:26.680 | I also have real estate in the US and I have a piece of property in Spain, so I could live

00:33:33.320 | in either one.

00:33:34.320 | Currently, I'm in California working in a clinic and I'm debating in the long run, but

00:33:40.400 | also in the short term, is it better for me to be in Spain or is it better for me to be

00:33:44.680 | here?

00:33:45.680 | I can do my business in either place.

00:33:47.360 | And a follow-up question, if you do have time, if not, that's fine, is whether there's an

00:33:50.920 | opportunity right now to invest in anything that comes to your mind.

00:33:54.560 | Thank you.

00:33:55.560 | Yeah, for sure.

00:33:56.560 | Yeah.

00:33:57.560 | Before I answer those, could you give any comments with your experience and what you're

00:34:01.800 | seeing on the ground of things that you think I've gotten wrong or things that I've gotten

00:34:06.360 | right in terms of just for my audience?

00:34:09.000 | Because, of course, we always appreciate when we can hear directly from somebody who's part

00:34:12.280 | of the community who has the medical knowledge.

00:34:15.280 | Can you give any comment on what you're seeing and where you think we go from here?

00:34:19.560 | Yeah, I mean, it would always be more comfortable speaking to you directly without your audience,

00:34:26.520 | but, I mean, I'm happy to say what I've experienced.

00:34:29.360 | So I'm a family medicine physician, so I'm in a community health center working in Compton,

00:34:34.160 | Los Angeles.

00:34:35.160 | So we have a little bit of a lower education status with patients and a little bit less

00:34:39.560 | access.

00:34:40.560 | So we are seeing a lot of people who are coming in with cold and flu symptoms because they're

00:34:44.560 | certainly afraid.

00:34:45.560 | They've been turned away at the ERs or they're trying to go to the hospitals.

00:34:49.760 | We don't have any testing.

00:34:51.200 | And even if we did have testing, we can't rely on the results of the tests right now.

00:34:56.680 | We don't know what the specificity and sensitivity is.

00:34:59.480 | We don't have enough personal protective equipment to collect those specimens, which can put

00:35:05.200 | us physicians at risk.

00:35:08.180 | We also have a lot of fear as far as me as a physician.

00:35:13.240 | Everybody said that there is this waiver, there's that law waiver, we can do telemedicine,

00:35:17.280 | we can do this.

00:35:18.280 | Everybody said that me as a physician, I'm off the hook for a lawsuit.

00:35:21.760 | So unfortunately, that hasn't come down the pipeline yet.

00:35:23.760 | So a lot of us physicians are afraid to diagnose a certain potential disease like this.

00:35:29.640 | If we see somebody with certain symptoms, I'm not saying that people do this, but I'm

00:35:35.480 | saying that physicians have, you know, we're careful about how we document it in the chart,

00:35:40.640 | because if I do miss a heart attack versus a pneumonia versus a COVID infection, then

00:35:46.320 | I'm on the hook.

00:35:47.320 | And if I do send the patient over to the ER, I'm on the hook.

00:35:50.680 | I get chewed out by the ER doctor, I get chewed out by the hospital, I get chewed out by the

00:35:53.640 | CEO, the CFO has given us talks at the clinic, the medical director has given us talks.

00:36:00.280 | So there's a lot of chaos and we're not getting enough information as physicians to know what

00:36:04.840 | to do, how to manage these patients, how to screen the patient, and what can I say to

00:36:08.680 | a patient?

00:36:09.680 | Should I keep him at home?

00:36:10.680 | Should I send him to the hospital?

00:36:12.000 | So there's a lot of chaos for us.

00:36:13.880 | We're protecting ourselves, we're protecting our ass, because I'm trying to protect my

00:36:17.800 | income.

00:36:18.800 | So that's what's happening there.

00:36:23.360 | But yeah.

00:36:24.360 | I think that's enough.

00:36:25.520 | I've got private messages from other physicians that I can share anonymously as well.

00:36:30.460 | So thank you.

00:36:31.460 | To answer your questions, I would say specifically Spain versus California.

00:36:37.000 | It seems to me that between the two, I'd probably rather be in California right now, especially

00:36:43.160 | for your opportunities to generate income off of this.

00:36:50.320 | I think that if you're going to work hard during this period, as you certainly are,

00:36:54.840 | that there's no reason for you not to get paid.

00:36:56.680 | And so there's probably a better opportunity for you to be able to generate income in the

00:37:01.280 | private market in the United States and through the telemedicine options versus the nationalized

00:37:07.600 | systems in Spain.

00:37:08.840 | Now if that's wrong based upon your experience, then just discount that.

00:37:12.440 | But to me that seems like an option.

00:37:14.480 | You can use your geographic flexibility to go where you can help people and be well compensated

00:37:19.640 | for that work.

00:37:20.920 | That would be helpful.

00:37:22.560 | In addition, it seems to me that if you are a US citizen, you are going to have a little

00:37:31.840 | bit more security there than you are in Spain, being perhaps a resident.

00:37:37.440 | But are you a citizen, an EU citizen or a Spanish citizen?

00:37:41.520 | I'm a permanent resident of Spain, so I have a visa and I'm a citizen of the US.

00:37:46.320 | Okay, so that's good.

00:37:47.320 | So anyway, that's one consideration.

00:37:48.600 | Beyond that though, I would look at just on the ground and say where do you feel more

00:37:52.560 | comfortable and where do you feel like you can serve more effectively.

00:37:55.840 | It might be possible if you're going to work at a clinic in Spain and also do telemedicine,

00:37:59.440 | perhaps that would be the most effective place for you to serve.

00:38:01.640 | I know you're not at this time just trying to figure out what's all in it for you, you're

00:38:04.880 | seeking to serve.

00:38:06.220 | But I would look at the medical options and see.

00:38:10.800 | You're probably, hopefully it's okay in either place.

00:38:14.720 | I don't know that, you know, the United States is probably a week or so behind Europe in

00:38:19.000 | terms of the proliferation of the infection, or at least the acknowledgement of the proliferation

00:38:25.840 | of the infection.

00:38:26.840 | And where we go from here, I don't know.

00:38:28.800 | I'd be slow to get on an airplane right now, so the fact that you're in California right

00:38:31.840 | now to me would be pretty persuasive.

00:38:34.360 | I don't have any more insight than that.

00:38:37.960 | You could probably be useful in both places and may you know God's wisdom and strength

00:38:42.560 | as you seek to serve in this time.

00:38:44.520 | As far as investment options, I see that as a question of now versus later.

00:38:49.020 | And these are very, very different scenarios.

00:38:51.820 | At the moment, answering investment options is hard because we don't know the extent of

00:38:59.960 | the, we don't know the extent of anything.

00:39:02.880 | We're still in the situation of just simply not having good, reliable information and

00:39:07.640 | thus good data analysis is very, very difficult because there's so many unknowns.

00:39:14.000 | Now I think we can be certain that regardless of what happens with the infection, with the

00:39:26.800 | virus, with the actual pandemic, it has already caused incalculable economic damage.

00:39:35.040 | At this point in time, I am mentally preparing myself for that economic damage to continue

00:39:41.880 | for minimum months and months and probably more like a year to 18 months.

00:39:48.440 | As best I can understand, it seems to me that there are two basic things that can solve

00:39:54.680 | the, that can potentially solve the medical problem and only one of them is short term.

00:40:03.940 | The first thing that will dramatically change the medical problem is the discovery of a

00:40:09.280 | very effective treatment protocol for people with coronavirus, with COVID.

00:40:14.700 | And so I see people talking about that.

00:40:17.560 | I see physicians trying things.

00:40:19.920 | Again, all the excitement in the last few days over chloroquine, I hope I'm saying that

00:40:24.440 | right, but there's excitement over it.

00:40:27.080 | But I haven't seen lots of people say, "Yes, let's trumpet this.

00:40:31.680 | We've got this thing licked."

00:40:34.080 | If some kind of extremely effective therapeutic treatment is found that's effective for young

00:40:42.540 | people and old people alike, that could bring this whole thing, that could bring the infection

00:40:48.720 | to a stop and that treatment could be preventive.

00:40:52.500 | It could be a way of inoculating people against the impacts of the infection.

00:40:56.720 | And then there are enough people I think who would be happy if they knew there were a treatment

00:41:00.080 | and say, "Okay, fine, I'll just go ahead and I'll get sick, I'll get infected and they've

00:41:04.600 | got a good treatment for me and we'll get herd immunity quickly in that situation."

00:41:09.000 | And so that's the best short term case for stopping the actual infection.

00:41:15.400 | Now the best long term case is a vaccine, but I don't see how a vaccine could be developed

00:41:21.680 | and or developed, tested properly, created and distributed in anything less than a year

00:41:30.440 | and probably that's even too optimistic.

00:41:32.660 | Something more like 18 months would be a time frame.

00:41:35.520 | There are companies who right now are trialing vaccines, but there's such a huge difference

00:41:41.480 | between here versus there that to me it just seems like only someone who's ignorant of

00:41:45.840 | that process would think that that's a short term solution.

00:41:50.160 | And so I'm looking for those two things, but the vaccine is long term.

00:41:54.440 | Now unless a treatment is found, what we know right now is that this is a deadly disease

00:41:59.280 | that's incredibly infectious and is killing many.

00:42:03.120 | And the modeling indicates that if this disease is not contained, then the death toll, what

00:42:09.520 | was it from the Olympia College this last week, you know, the estimated death toll in

00:42:14.200 | their modeling was something like four point, you know, over four million Americans, something

00:42:19.040 | like 45 million people globally in the worst case scenario.

00:42:22.520 | Then they modeled different scenarios.

00:42:24.280 | Now those things have of course have a huge margin of error.

00:42:26.420 | We don't know that for sure, but the only thing we know for sure absolutely works is

00:42:32.520 | quarantine, is social distancing.

00:42:34.600 | We know that if you sit in your house and you don't go anywhere and you're not sick

00:42:38.720 | now and you don't contact any sick people, you're not going to get sick.

00:42:42.640 | And so quarantining and/or like vaccination and/or treatment is the only solution, but

00:42:50.160 | that comes with an incalculable economic cost.

00:42:53.340 | And so at this point, I'm hoping that there's a therapy developed that's very effective

00:42:58.040 | within the next weeks and months.

00:42:59.520 | And of course there are millions of doctors all around the world trying to find that,

00:43:03.440 | but until that's found, I don't see how this doesn't continue for a minimum of a year to

00:43:11.160 | 18 months.

00:43:12.600 | Maybe they'll figure out how to do rolling lockdowns to say, "Okay, we're going to lock

00:43:17.640 | down for three weeks.

00:43:19.000 | That minimizes the spread of infection.

00:43:20.880 | Then we're going to go back to business as normal for a few weeks and then we're going

00:43:24.880 | to lock down again."

00:43:26.160 | But the cost of human lives is simply of an uncontrolled viral outbreak is simply too

00:43:34.820 | high for I think any politician to say, "Yes, we're going to do that," and for any intelligent

00:43:39.360 | rational person to be willing to engage with.

00:43:42.460 | And so at the moment, I see this economic effect as getting deeper and longer and being

00:43:48.360 | on a period of again minimum months and months and months and months while hoping that a

00:43:54.280 | treatment is developed.

00:43:55.680 | So if that analysis is right, if it's wrong, tell me why it's wrong, but if that analysis

00:44:00.640 | is right, I don't see a short-term investment opportunity that makes any sense.

00:44:07.160 | And you can kind of go through almost all of the different asset classes, and by the

00:44:11.600 | way, except possibly the short-term solution would be cash, but that's not an investment,

00:44:17.180 | or possibly gold because of the perceived stability of gold in terms of crisis.

00:44:25.340 | But if we look at investment opportunities, I think generally we look at business.

00:44:32.380 | I always talk about it in terms of business.

00:44:34.920 | I look at it in terms of real property, usually real estate and/or other tangible property,

00:44:40.800 | and then paper assets.

00:44:42.300 | Well paper assets are in turmoil.

00:44:44.300 | Stocks are obviously in turmoil for good reason, and I don't see any reason to expect that

00:44:47.740 | to end any time soon.

00:44:49.700 | The market is going to continue to react to massive inflows of money.

00:44:53.520 | The market's going to continue to react to bad news, good news, etc.

00:44:56.820 | But if you conceive of what a global lockdown, what you're seeing all around the world, a

00:45:02.020 | global lockdown is right now, and especially the potential cost as this virus continues

00:45:07.360 | to spread in areas where there's, you know, the testing in the United States is awful,

00:45:13.500 | but what about the testing in Nigeria, right?

00:45:15.380 | What about the testing in the Congo?

00:45:16.640 | What about the testing in greater India?

00:45:20.020 | Some of these, of course, Nigeria and India being very populated, the Congo not, but I

00:45:23.820 | mean the testing in these areas, it's just, it's incalculable, the cost here.

00:45:29.100 | And if you look at the best-case scenario in the United States being catastrophic, the

00:45:32.940 | best-case scenario in Nigeria or the best-case scenario in Darfur or the best-case scenario

00:45:40.700 | in Mombasa is just awful.

00:45:44.440 | It's worse than catastrophic.

00:45:46.140 | So man, that's it.

00:45:49.860 | How encouraging Joshua is today.

00:45:52.140 | So paper assets on a global basis, where's the obvious play, right?

00:45:57.140 | Maybe there's a trade involved that you could do.

00:45:59.080 | Maybe there's a trade in healthcare or something like that, and that's possible.

00:46:03.780 | But in terms of generally speaking, I expect massive continuing levels of volatility as

00:46:08.660 | the market generally continues to come to terms with where we are and where we're going

00:46:14.020 | from here.

00:46:15.020 | I don't see how it gets better in the short term.

00:46:18.120 | So I don't see an obvious paper play that I'm willing to say or I'm willing to advise

00:46:25.080 | on.

00:46:26.080 | What about real property?

00:46:27.240 | So the obvious solution here, well, let's go to business first.

00:46:30.100 | So business is incredibly uncertain because with the exception of a business that you

00:46:33.800 | can create, right, I think that if you had the opportunity to say, "I'm going to build

00:46:38.780 | a telemedicine business," or, "I'm going to build something in the private market maybe

00:46:42.380 | with unlicensed people who aren't physicians and figure out something there," there are

00:46:46.240 | opportunities in business that can serve this need.

00:46:51.160 | But for most businesses, most businesses right now are just utterly paralyzed because it's

00:46:56.220 | almost impossible for the vast majority of businesses to function in this environment.

00:47:01.120 | There are a few that can function but most cannot.

00:47:04.560 | And so the business thing is highly specific.

00:47:07.180 | So what about property?

00:47:09.300 | Real property as in real estate, land, and/or physical property?

00:47:14.280 | Well, I think the power is of course with some kinds of tangibles.

00:47:17.440 | If you were sitting on a mountain of – we can't use masks because of course you donate

00:47:22.100 | all those.

00:47:23.100 | But if you were sitting on something that were in high demand right now with the exception

00:47:26.580 | of the laws against it, you could make money off of it.

00:47:30.260 | There was that story of the guy with 17,000 hand sanitizer bottles.

00:47:34.940 | He could just go out and – well, when traffic was flowing, he could go stand in the road

00:47:38.540 | like they do outside of the United States and sell them one off to people on the road.

00:47:43.580 | But there aren't real obvious plays there, especially there aren't real obvious plays

00:47:48.020 | that are not taken.

00:47:50.340 | Ammunitions sold out, ammunition sold out.

00:47:53.380 | So the only obvious play with any kind of real property would be something like gold

00:47:57.100 | and/or silver.

00:47:58.860 | And I think that there's an interesting argument there.

00:48:02.660 | I'm buying more gold.

00:48:04.780 | I think that that's probably something that could work out.

00:48:11.180 | The gold market has not – the price of gold has not gone through the roof based upon current

00:48:17.700 | events which is really interesting.

00:48:20.100 | But of course, most people don't own gold.

00:48:22.300 | There are arguments against it.

00:48:24.420 | The single thing that I never expected, the thing that has been the most shocking to me

00:48:29.540 | and I'm using those words accurately and carefully.

00:48:33.780 | That's not hyperbole.

00:48:34.780 | But I have been legitimately shocked is I have never, ever imagined a scenario in which

00:48:41.420 | you would see governments doing things like in California where you are forbidding evictions.

00:48:47.980 | I never would have imagined that and I thought I'd imagine some bad things and that was

00:48:52.780 | past my imagination.

00:48:54.740 | And I don't know anything of what to do with that.

00:48:57.300 | But generally I would have said if this were a week ago before those laws started getting

00:49:01.740 | passed, a week ago I would have said, "Well, the obvious play here is going to be buying

00:49:06.260 | real estate."

00:49:07.260 | And so my plan has been for years to stockpile cash, wait for recession.

00:49:12.220 | I've seen it as inevitable that recession comes.

00:49:14.420 | I would stockpile cash, wait for recession and then on the backside of recession when

00:49:18.660 | people start losing their houses, you start having increases in foreclosure, then I would

00:49:22.980 | go ahead and I would start buying real estate and I would establish a large and broad rental

00:49:27.300 | real estate portfolio.

00:49:28.300 | That's been my plan since 2015.

00:49:32.140 | I thought it would happen sooner.

00:49:33.580 | I didn't expect it to take till 2020 but that's been my plan since 2015.

00:49:37.820 | I was wrong on the timing.

00:49:39.580 | But now with some of these changes in legislation, now I don't even know what to do with that

00:49:45.820 | because the entire real estate market is being turned upside down where if landlords can't

00:49:51.780 | evict tenants, then why would any tenant in their rational mind pay their rent?

00:49:58.700 | And if lenders can't foreclose on properties, then why does any borrower pay their mortgage?

00:50:05.660 | And so right now I don't know what to do with that.

00:50:08.500 | I've looked at it, I've thought about it and as far as I know, that's unprecedented.

00:50:12.900 | Maybe I just have – I have been so busy, I haven't had the time to go and try to do

00:50:16.860 | some research and see if there's something I didn't know about that, that maybe it's

00:50:19.900 | happened before and I just didn't know about it.

00:50:21.980 | But I consider that unprecedented, absolutely unprecedented and I have no idea what to do

00:50:26.780 | with that from an investment perspective.

00:50:28.620 | I've been on the phone with clients who are large real estate, own large amounts of real

00:50:32.660 | estate and we're just trying to figure out, "Okay, what do you do in this?"

00:50:36.260 | My answer is I don't know.

00:50:37.820 | And so the only thing that I see that's safe is to revert back to income, generating an

00:50:44.560 | income and trying to figure out how to serve people in a way that generates income.

00:50:48.740 | Cash, US dollar has strengthened over the last week, but cash, I go back to foreign

00:50:58.100 | currency diversification because I think the US dollar is the strongest currency in the

00:51:02.900 | world, probably will remain that way, but I'm nervous about having everything in US

00:51:07.060 | dollars and then we go back to precious metals.

00:51:09.820 | And so that's what I'm doing and at the moment it's not, the way forward is not clear to

00:51:14.820 | me because of these unknowns.

00:51:18.500 | I don't see the path because the path absent a treatment, absent an effective treatment

00:51:25.020 | protocol is utterly depressing.

00:51:30.060 | With an effective treatment protocol, then perhaps we could get to some kind of solution,

00:51:38.140 | but how do I predict what that effective treatment protocol is?

00:51:40.820 | And so there what I would say is what you should do as an investor is you should rely

00:51:45.060 | on your deeper level of biology and how to read kind of the medical literature and then

00:51:54.300 | as you see solutions or non-solutions, then think about the impact of those and then try

00:52:01.220 | to trade based on your inside knowledge.

00:52:03.180 | That would be my best advice at this point in time.

00:52:05.980 | >>Joshua Foer: Thank you, Josh.

00:52:08.380 | >>Joshua Cohen: My pleasure.

00:52:10.300 | Thank you for the work that you're doing.

00:52:11.300 | I appreciate your service.

00:52:13.580 | All right, we go to Indiana.

00:52:17.100 | Welcome to the show.

00:52:18.100 | How can I serve you today?

00:52:19.100 | >>Indiana Jones: Hi, Joshua.

00:52:20.100 | Thanks for taking my call.

00:52:21.100 | This is not the question that I called about, but when you were discussing getting cash

00:52:26.340 | earlier, I thought you gave a good explanation of why it might become hard to get cash in

00:52:33.100 | the near future, but you didn't really say why you think that having thousands or tens

00:52:40.100 | of thousands of dollars of currency on hand would be especially valuable in this time

00:52:45.420 | period.

00:52:46.420 | >>Joshua Cohen: I'm concerned about banks being closed down.

00:52:50.380 | I'm concerned about bank holidays.

00:52:51.580 | I'm concerned about runs on the bank.

00:52:54.620 | Every single time that there is economic panic and financial panic, what happens is there

00:53:00.900 | starts to be a run on the bank.

00:53:03.360 | People start to go to the bank and get physical currency.

00:53:05.300 | Now, in today's world, it's hard to imagine because all of us are used to doing work digitally.

00:53:10.180 | It's a little hard to imagine it compared to the past.

00:53:13.100 | The world of 2020, where the vast majority of us function on digital currency, it's hard

00:53:21.260 | to imagine, compared to 1950 when digital currency didn't exist.

00:53:29.660 | But I still think that people are accustomed to this idea that in a bad scenario, cash

00:53:35.100 | is what is needed and physical currency is what they mean.

00:53:40.940 | It would not surprise me to wake up on Sunday morning or Monday morning or Tuesday morning

00:53:46.180 | and see lines of people lined up at ATMs if this continues at the current pace.

00:53:50.700 | Maybe I'm wrong.

00:53:51.780 | Maybe I'm three weeks wrong.

00:53:52.900 | It wouldn't surprise me to see that on Monday, and it wouldn't surprise me not to see that

00:53:55.980 | on Monday.

00:53:56.980 | It wouldn't surprise me not to see that a month from now.

00:53:59.620 | But if that starts to happen, that creates a general contagion and a general panic.

00:54:05.460 | What do government bureaucrats do?

00:54:09.700 | What do they do in that situation?

00:54:13.260 | The answer is they close down the banks.

00:54:15.460 | They shut down the banks.

00:54:17.300 | They do that because they have to stop the flow of money and they have to stop the panic.

00:54:21.220 | They understand that it's going to be the panic, and so they declare a bank holiday.

00:54:24.580 | Now that bank holiday can vary depending on what country you're in and depending on how

00:54:29.160 | severe the crisis is.

00:54:30.980 | But the bank holiday is declared and the government says, "Listen, you have FDIC insurance.

00:54:36.060 | There's no need for you to panic.

00:54:37.700 | You're insured at $250,000 per account.

00:54:40.300 | We promise that these banks are going to be fine."

00:54:42.500 | The bankers all say, "We promise that you're going to be completely fine," but they stop

00:54:48.340 | the ability of people to get access to money, get access to physical currency.

00:54:53.880 | So does that work?

00:54:54.880 | Well, a lot of people believe that it does, and there's arguments in favor of it doing

00:54:59.380 | it.

00:55:00.380 | But it certainly is not comforting when all of a sudden you see a bank holiday in your

00:55:04.300 | state.

00:55:05.300 | In fact, more people, more and more want to go and get cash.

00:55:09.580 | And so what else does the government do in times of panic?

00:55:16.380 | Well, they start to bring in price controls, which just make everything worse.

00:55:21.860 | Anti-price gouging laws are a form of price controls, and so they bring in price controls,

00:55:27.060 | and that makes everything harder.

00:55:32.620 | Sometimes they make currency transactions illegal, whether it's certain currencies or

00:55:36.180 | certain larger amounts of currency.

00:55:38.260 | And I think that the generalized population has become relatively immune to this at this

00:55:42.920 | point in time.

00:55:43.920 | Americans, for example, have put up with and have not cried out about all the currency

00:55:48.780 | controls that have been in place for decades now.

00:55:52.780 | Americans have not been concerned about the fact that you can't do transactions bigger

00:55:57.020 | than $10,000 in physical currency without a currency transaction report.

00:56:03.780 | In Europe, many parts of Europe, it's illegal to do large transactions of currency.

00:56:09.380 | You can't go and do something simple like buy a car from a guy with money.

00:56:13.100 | Thankfully, it's not illegal yet in the United States, but it is certainly illegal in several

00:56:19.620 | parts of Europe.

00:56:23.900 | In other countries, they've banned currency.

00:56:26.320 | And so the question always comes down to navigating this, and it becomes brutal because it changes

00:56:31.100 | day by day.

00:56:32.300 | In China, they have taken, in the wake of the virus, they took all the currency in and

00:56:37.220 | said they were going to reissue it, but they've moved everyone to a digital payment system.

00:56:40.740 | India, what was the thing?

00:56:42.060 | Let me get my facts straight here.

00:56:43.340 | Just off the top of my head, India last year canceled currency transactions, et cetera.

00:56:49.420 | So the point is that I think that there's still, with the US dollar being strong, I

00:56:53.500 | think that the vast majority of people generally believe that the US dollar is going to be

00:57:00.420 | fine and that the vast majority of people still are happy to have cash.

00:57:04.460 | And especially in a system of government money where you say, "Hey, I'll sell you this thing

00:57:08.700 | here for cash and it doesn't show up so I can still get my free money from the government

00:57:12.300 | or I can avoid this tax," et cetera, I think that when you have cash, you have the ability

00:57:16.380 | to move in the middle of a bank close down.

00:57:18.860 | So if there's a bank holiday or if there's issues on digital money or you're required

00:57:23.980 | to track everything, et cetera, then I think currency still gives you value.

00:57:29.600 | And so when you have currency, you have the ability to provide the needs of your family.

00:57:33.560 | You can go to your neighbor who went to Costco a few weeks ago and bought 10 cases of toilet

00:57:40.420 | paper and say, "Listen, man, would you sell me a case of toilet paper and I'm happy to

00:57:42.940 | pay you triple what you paid for it?"

00:57:44.140 | And the neighbor says, "Yeah, sure.

00:57:45.140 | I'll do that."

00:57:48.700 | You can buy services that you need.

00:57:50.680 | You can purchase, have people do things for you with currency.

00:57:55.900 | And so it's just the most useful tool in your toolbox and it's one of the few things that

00:58:01.100 | you can do in a scenario where there's uncertainty.

00:58:09.220 | You can often go and use currency to get access to things that are simply not available.

00:58:14.420 | So I've said for years, "Why have I talked about stockpiling?

00:58:16.660 | Why have I talked about preparedness?"

00:58:18.980 | Well, what I've said for years is money is always your most effective tool.

00:58:24.700 | It's always your number one tool except in the situations where money doesn't work.

00:58:30.340 | So why do we save money first?

00:58:32.500 | Well, because saving money is your best solution to problems in your life except when money

00:58:39.180 | doesn't work.

00:58:40.180 | And so what did you see happen in the toilet paper market as just a best example?

00:58:43.740 | Money stopped working.

00:58:45.620 | You couldn't get toilet paper really at any price.

00:58:48.180 | Now that's not actually true.

00:58:49.920 | You could have gotten it at some price but you couldn't get it in the store because money

00:58:53.700 | stopped working for toilet paper and because the supply went out.

00:58:57.760 | And so what's the next big thing that happens in a bad scenario?

00:59:02.780 | Again, I know this sounds nuts and I feel like a crazy man doing it but this is what

00:59:07.700 | you see throughout history which is why you've got to be prepared in advance.

00:59:11.700 | Well, money still works in a situation where—so money is your best tool to buy stuff as long

00:59:21.660 | as money works.

00:59:22.660 | We've talked about that.

00:59:23.660 | We've talked about stockpiling.

00:59:24.660 | That's why we started talking in January about stockpiling, about preparedness, etc.

00:59:29.140 | So now there are shortages.

00:59:31.060 | There are shortages and there are probably going to be increased shortages, increased

00:59:33.780 | rationing.

00:59:34.920 | Money is still your best tool to be able to surpass those shortages.

00:59:38.700 | If you don't have toilet paper but you know your neighbor has a bunch of toilet paper

00:59:43.460 | then you can just simply go to your neighbor and you can say, "Listen, neighbor, could

00:59:46.180 | I buy toilet paper?"

00:59:47.180 | And you can pay a high price.

00:59:48.820 | But you can only do that if you have physical currency.

00:59:53.460 | Some people accept digital currency and you've got Venmo, you've got PayPal, you've got ways

00:59:56.860 | to convey money but physical cash is still far more powerful.

01:00:02.860 | So physical cash gives you the opportunity to get the stuff that your family needs in

01:00:10.140 | a difficult situation.

01:00:11.820 | So that's the phase we're at now.

01:00:13.540 | Now what's the next kind of final phase if you wind up with a really bad economic crisis?

01:00:18.340 | Well, in a really bad economic crisis you wind up with some combination of deflation

01:00:25.140 | and/or mass inflation and/or hyperinflation.

01:00:28.540 | And so there are people who argue about these things.

01:00:31.460 | Now, hear me clearly, at the moment I do not think that that is going to happen in the

01:00:37.820 | United States.

01:00:38.820 | I do think that'll probably happen in some other countries in the world but I do not

01:00:42.860 | think that that's going to happen in the United States yet.

01:00:45.900 | But I think that it is increasingly possible and I'm concerned about it because I see no

01:00:51.360 | end in sight for the reasons previously stated medically.

01:00:55.260 | And so the biggest problem I have is not rational analysis of, "Hey, this could happen."

01:01:01.700 | The biggest problem I have is simply my own inability to believe that I'm even saying

01:01:06.540 | that out loud.

01:01:07.540 | And that's a normalcy bias which is a flaw, it's a logical error, it's a logical fallacy.

01:01:13.660 | And so I can't make my analysis based upon logical fallacies.

01:01:18.300 | So let's talk about what happens if you go into a deflationary environment or a hyperinflationary

01:01:23.340 | environment.

01:01:24.800 | Mass inflation is the least objectionable of those and probably the most likely.

01:01:29.020 | But in a deflationary environment, you want to have money so that you can buy stuff.

01:01:32.540 | And in a hyperinflationary environment, you want to have money so you can buy stuff.

01:01:36.300 | And so if all of a sudden you got into one of those situations where you had to very

01:01:40.580 | quickly make large purchases, you want to have the ability to do that with actual money

01:01:46.120 | that you can access, not money where they say it's transaction decline.

01:01:50.100 | That's the value of cash.

01:01:51.600 | And so whether that's just simply to buy food, if there are food shortages, whether that's

01:01:55.620 | simply by having cash so that when capital controls or price controls or more rationing

01:02:02.060 | or anti-hoarding laws or just any other kind of financial control or financial repression

01:02:07.100 | laws enacted, then you have the ability to work around that system.

01:02:12.700 | If I've got $30,000 in my pocket, I can get on an airplane, I can go to another country

01:02:18.220 | and I can turn that $30,000 into local currency and I can start again.

01:02:21.860 | And so that's the argument for cash.

01:02:25.080 | It's the thing that solves problems when everybody else is locked down, when everybody else's

01:02:30.500 | accounts are frozen, when everybody else has their credit cards are frozen, and we're in

01:02:35.920 | such a crazy scenario that it's increasingly possible to see those things happening.

01:02:46.220 | And so I still think there's time.

01:02:48.080 | I still think there's plenty of time.

01:02:49.640 | I still hope that that's premature, but this is the time to be prepared for that next step.

01:02:56.000 | And so what's the cost of having cash?

01:02:57.160 | Well, the cost of having cash is foregone interest, right?

01:03:00.800 | You're not getting interest on cash anyway.

01:03:02.840 | And so the only costs of having cash that I see is number one, you have a security risk,

01:03:08.840 | risk of theft, risk of loss, risk of fire, but you can mitigate those risks pretty well

01:03:15.920 | and you have a convenience risk that you're not going to go up in today's world in the

01:03:19.680 | United States.

01:03:20.680 | You're not going to go and buy, generally speaking, you're not going to go and buy a

01:03:24.440 | house for $100,000 of cash.

01:03:26.520 | I guess it's in theory possible, but it's not going to happen.

01:03:29.320 | So in that situation, if all of a sudden we say, "Yeah, it's time to go ahead and invest

01:03:32.600 | in real estate and I want to qualify for a mortgage in a kind of a more normal world

01:03:37.040 | where we're trying to take advantage of normal level recessions," then you need that money

01:03:41.920 | in the bank.

01:03:42.920 | So you can prove its provenance.

01:03:44.600 | You can prove its legal creation.

01:03:47.260 | You have the bank trail of it.

01:03:48.960 | So that's where you need the money in the bank.

01:03:50.800 | And so if I, you know, I'm not taking all my money out of the bank and going in cash,

01:03:55.520 | but I am concerned about not having significant amounts of cash and I'm concerned about not

01:04:00.340 | having foreign currencies, et cetera.

01:04:03.440 | So did that make sense?

01:04:04.440 | Was that a good explanation or did I totally muddy the water?

01:04:07.440 | Yeah, I think so.

01:04:10.720 | I don't disagree.

01:04:11.720 | I actually, I'm in my car and I literally just went to the bank and took some extra

01:04:14.760 | cash out because I was listening to you.

01:04:17.160 | I guess it seems to me like I'm in probably a similar situation to the caller you were

01:04:23.000 | talking to earlier about that.

01:04:25.200 | And you know, I don't have hundreds of thousands of dollars set aside where, you know, I can

01:04:29.480 | put $30,000 in cash and that's, and I understand it's not a big deal to have all my money in

01:04:34.640 | cash for a short period of time, but you know, I have some stockpiles of food and toilet

01:04:42.160 | paper and stuff like that.

01:04:43.640 | You're a rich man.

01:04:45.840 | Everything crashes.

01:04:46.840 | Yes.

01:04:47.840 | If everything crashes and people aren't paying their mortgages and the banks are shut down

01:04:51.840 | and I'm not allowed to use my debit card or my credit card to pay my electric bill, you

01:04:57.440 | know, a few thousand dollars would supply my family with food and toilet paper and such

01:05:02.920 | like beyond what we need for quite a long time.

01:05:06.440 | So I guess I'm not really disagreeing with anything you said.

01:05:10.280 | I just, it seems like as a listener, I can start to feel a little bit panicked listening

01:05:14.520 | to you.

01:05:15.600 | And for those of us in the middle, middle area where we're not going to say, oh yes,

01:05:20.160 | I have lots of cash stockpiles and hey, here's a great deal on a $40,000 RV.

01:05:24.240 | If I can hand over a hundred dollar bills and that's, you know, no big deal to me to

01:05:28.200 | do that.

01:05:29.200 | I mean, I could manage, but we could have $20,000 in cash sitting at home.

01:05:35.280 | I just want to encourage you to maybe say like, is there some reason that a person who

01:05:39.680 | has the net worth of 40 or $50,000 liquid assets, I don't think we should be feeling

01:05:47.160 | panicked and racing out to try to get all of that hundred dollar bills.

01:05:50.440 | I wanted to give you the chance to clarify that.

01:05:52.960 | It's a fair point and it's very difficult to me knowing that my words are listened to

01:06:00.760 | by other people.

01:06:02.240 | I don't wish to be the person who spreads panic.

01:06:08.160 | There is a time to panic.

01:06:11.640 | The best time to panic is before it's needed so that you're prepared for it.

01:06:16.280 | And so, you know, let's say that you are using a chainsaw and your chainsaw slips and cuts

01:06:23.920 | your thigh open and you're looking down at your thigh gushing blood and you know your

01:06:30.240 | femoral artery is right there.

01:06:32.640 | You're going to die in a few minutes unless a solution is found.

01:06:38.440 | And so that is the time not to, you know, obviously this word panic because panic is

01:06:45.120 | truly counterproductive where your heart starts racing, your mind shuts down, your body is

01:06:50.280 | flooded with adrenaline.

01:06:51.640 | Panic is never a good idea.

01:06:53.760 | So I don't know the word to use to say this is serious and you have exactly 60 seconds

01:06:58.960 | to stop the problem.

01:07:00.780 | So in that situation, what do you do?

01:07:03.600 | The only hope of your living in that situation is that a tourniquet is applied to your thigh

01:07:11.320 | in seconds, in tens of seconds, and a tourniquet is applied to your thigh in tens of seconds

01:07:18.680 | and that you have qualified medical professionals there in as absolutely fast as they can be

01:07:24.920 | there, 60 seconds would be great.

01:07:27.320 | So when you look at a situation like that, you look down and you see how serious this

01:07:32.480 | is.

01:07:33.720 | You would be an idiot who should panic if you went out to use a chainsaw wearing a pair

01:07:38.760 | of board shorts and flip-flops without a tourniquet, right?

01:07:41.680 | You're stupid.

01:07:42.680 | You're absolutely stupid to do that.

01:07:44.580 | So if you're going to use a chainsaw, you think ahead and you say, number one, I'm going

01:07:48.880 | to make sure that I wear proper safety equipment.

01:07:51.400 | I'm going to wear chainsaw chaps to protect me in case my chainsaw slips.

01:07:54.960 | I'm going to wear steel-toed chainsaw boots.

01:07:56.840 | I'm going to be prepared with proper protective equipment.

01:08:00.680 | Well, people don't do that because it costs, people don't do that because it costs, you

01:08:05.240 | know, hundreds of dollars to go and buy the stuff, but you're an idiot if you don't do

01:08:09.240 | that.

01:08:10.240 | Number two, you make sure that you have a tourniquet on your person ready to go so that

01:08:14.000 | you can quickly reach down and if you have an accident, you can put a tourniquet on your

01:08:18.040 | leg and you learn how to use it.

01:08:20.000 | And so the time to panic is before you ever turn on the chainsaw.

01:08:24.000 | Now that panic is just simply preparation.

01:08:28.800 | And so I don't know how to properly with my own voice other than explain the difference

01:08:33.220 | between these things.

01:08:34.220 | I'm not panicked.

01:08:35.800 | I'm not panicking.

01:08:37.040 | I am, I'm rested.

01:08:38.960 | I'm relaxed.

01:08:39.960 | I'm trying to think rationally and clearly, but I'm trying to observe the situations at

01:08:44.160 | hand, study the dangers, make appropriate preparations to care for my family and make

01:08:51.920 | appropriate preparations to help my listeners who've put their confidence in me without

01:08:56.980 | saying do something stupid.

01:08:58.720 | So that's the only way I know how to do it is to explain here's the situation and here's

01:09:04.080 | the solution.

01:09:05.160 | The solution to chainsaw safety is number one, hire somebody else to do it and let them

01:09:08.800 | be the ones to die for it.

01:09:11.540 | Number two, the solution is wear proper protective equipment, use proper techniques for safety

01:09:17.760 | and then number three to have a tourniquet.

01:09:20.920 | But if you look down and you don't have that stuff in place, then somebody should say this

01:09:25.420 | is unwise, this is foolish.

01:09:28.300 | So I don't know if that muddies the water, but basically here's the reality we're in.

01:09:32.400 | Okay, the risk of a viral pandemic has always been there.

01:09:39.440 | It's always been there throughout history.

01:09:42.560 | Viral infectious pandemic has changed the course of history time and time again as previously

01:09:47.400 | discussed with previous examples.

01:09:49.000 | It is a massive risk.

01:09:53.160 | When we start to go into one, what you're hoping for is you're hoping to see competent

01:09:59.320 | reaction to that viral pandemic.

01:10:03.360 | That's why there is a World Health Organization.

01:10:06.180 | That's why every country has some kind of Centers for Disease Control and why every

01:10:11.520 | country and many cities hire infectious disease specialists and why there are teams of people.

01:10:17.460 | That's why hospitals stockpile personal protective equipment.

01:10:20.760 | That's why they're prepared for that and you hope for competence in those situations.

01:10:25.040 | And with competence, what you can see is that any viral infectious disease outbreak can

01:10:29.680 | be properly managed.

01:10:31.560 | You can see that in Singapore right now.

01:10:33.380 | You can see that in South Korea.

01:10:35.260 | You can see that there have been competent reactions and responses to this viral outbreak.

01:10:42.400 | And so you can even see it in China.

01:10:44.040 | It was incompetent at first, but at the moment it seems like they have competently responded.

01:10:49.000 | Now all of us have the opportunity to respond competently to that risk.

01:10:55.160 | The United States government has the opportunity to respond competently to that risk.

01:10:58.920 | The Panamanian government has the responsibility.

01:11:00.940 | Every government in the world has the opportunity to respond competently.

01:11:06.680 | Sometimes competent response happens and sometimes competent response doesn't happen.

01:11:11.580 | Now let's go over to financial risks, market risks, fiscal risks, monetary risks.

01:11:17.480 | Every government in the world has the ability to manage its finances competently with regard

01:11:22.080 | to its fiscal situations.

01:11:23.780 | There's no requirement that a government borrow money.

01:11:26.040 | There's no requirement that government builds massive welfare states destined to support

01:11:30.120 | millions of people.

01:11:31.480 | There's no requirement that governments build these huge bloated infrastructures based on

01:11:36.360 | borrowed money.

01:11:37.700 | There's no requirement by that.

01:11:39.240 | There are many governments in the world that run their finances very well.

01:11:43.520 | You could go to Singapore and you can see a model government, right?

01:11:46.460 | You can go to many countries and you can say, "Hey, this country doesn't borrow a lot of

01:11:49.680 | money.

01:11:50.680 | This country doesn't create bloated welfare systems.

01:11:52.480 | This country is actually profitable.

01:11:54.440 | They're competent."

01:11:55.880 | But you can also look around and say that there are countries that are completely incompetent.

01:12:00.140 | So on a fiscal level, what you have in the United States is you have complete and gross

01:12:04.520 | incompetence on a fiscal level.

01:12:06.880 | You have utter incompetence fiscally.

01:12:09.760 | So fiscally can go on for a while, right?

01:12:12.200 | That can happen.

01:12:13.200 | Now what about monetarily?

01:12:14.360 | You could, in theory, if you are committed to the theories of Keynesianism and the way

01:12:19.020 | that modern policies are managed, you could say, "We could have a competent federal reserve."

01:12:23.960 | And I think for the most part, you can have good evidence to believe that there's a fairly

01:12:27.740 | competent federal reserve.

01:12:29.460 | Of all of the people associated that I've just mentioned with regard to the bureaucrats

01:12:35.820 | handling Centers for Disease Control or pandemic infections teams in the United States, they've

01:12:45.400 | proven thus far to be generally incompetent with sparks of brightness.

01:12:50.740 | Fiscally, the US government is fiscally incompetent with no sparks of brightness whatsoever.

01:12:56.600 | The Federal Reserve, monetarily, mostly competent right now.

01:13:01.460 | But I get concerned about how long that competence lasts.

01:13:04.260 | So I think that they're competent.

01:13:06.720 | I don't generally believe in the underlying theory of Keynesianism.

01:13:09.640 | I think that the way that it's done is a very modern experiment that the vast majority of

01:13:14.800 | countries in the world have decided to engage in.

01:13:16.880 | And I don't think it lasts.

01:13:18.780 | I don't think it lasts.

01:13:20.280 | But I'm hoping it lasts a little bit longer.

01:13:23.140 | So I'm ranting, but that's the best I got for you.

01:13:27.640 | I'm sorry.

01:13:28.640 | You got another question?

01:13:29.640 | Thanks.

01:13:30.640 | Yeah.

01:13:31.640 | I will say, I think what you're saying about panic, I don't think panic is a good word.

01:13:32.640 | But we should always react at an appropriate speed for the urgency of the situation.

01:13:40.680 | And the key is to always do that in everything, every day.

01:13:44.080 | And then being able to recognize when the situation changes, and realize that I was

01:13:49.480 | chainsawing, and I didn't need to act urgently.

01:13:51.820 | I should be slow and careful.

01:13:53.900 | Now I'm bleeding to death, and I need to act a different action much more urgently.

01:13:59.400 | 100% agree, and I'm sorry for using the word panic because you're exactly right.

01:14:03.960 | There's never a good time to panic.

01:14:05.440 | If by panic we mean that adrenaline pumping, got to do something, freak out, no.

01:14:11.440 | The time if you cut your leg with a chainsaw and your femoral artery is bleeding, don't

01:14:15.160 | panic.

01:14:16.160 | Call for help as fast as you can.

01:14:17.860 | Look around for something that can be used for bleeding control, even as an improvised

01:14:25.680 | method.

01:14:26.680 | Don't put pressure on it, and ask God to forgive your sins.

01:14:29.680 | You don't panic, you respond quickly.

01:14:31.920 | Right.

01:14:32.920 | And that's always, even in non-emergencies, doing the best thing directly and immediately

01:14:38.960 | is an important life skill I'm seeking to gain.

01:14:42.680 | Exactly.

01:14:43.680 | So if you have time to pivot to a completely non-emergency and coronavirus related question,

01:14:50.360 | I have one.

01:14:54.360 | I think that I have a, for lack of a better term, I'll call it a working class mindset.

01:14:59.320 | I've heard the term poverty consciousness, that I think, I'm not sure I totally have

01:15:04.320 | that, but to some extent, what are your thoughts on helping to overcome that?

01:15:11.040 | I make pretty good money by American averages, probably as much or more than anybody in my

01:15:19.440 | family or my in-laws has made, makes, or ever made, but not, you know, it's about $80,000

01:15:26.320 | a year.

01:15:27.320 | And so I think that I am sort of mentally, I guess stuck would be the right word in moving

01:15:35.120 | beyond that and thinking like a non-working class wealthier person, if that makes sense.

01:15:42.240 | It does.

01:15:43.240 | I love the question.

01:15:44.760 | I've got one more caller on the line, since we spent so much time on your first one, and

01:15:49.080 | it's just hard for me to pivot from kind of these serious topics, so these urgent topics

01:15:54.160 | to that, which is very important.

01:15:55.680 | Do me a favor, call in next week and I'll try to remember to put you first in the queue.

01:16:01.500 | And let's start with that because I'd love to start next week's Q&A show with that question.

01:16:05.040 | Fair enough?

01:16:06.040 | Absolutely.

01:16:07.040 | Awesome.

01:16:08.040 | Thank you very much, Joshua.

01:16:09.040 | All right.

01:16:10.040 | Final call of the day.

01:16:11.040 | We go to Illinois.

01:16:12.040 | Welcome to the show.

01:16:13.040 | How can I serve you today?

01:16:14.040 | Hi, Joshua.

01:16:15.040 | This is Sean.

01:16:16.040 | Can you hear me?

01:16:17.040 | Yes, sir.

01:16:18.040 | Go ahead, Sean.

01:16:19.040 | Hi, Joshua.

01:16:20.040 | Thanks for all of your work on this topic.

01:16:21.040 | A few weeks back, you said like now is the time to do things before panic sets in and

01:16:26.680 | act appropriately, so I appreciate your thoughts there.

01:16:29.680 | One of the things I'm thinking about moving forward with regards to paper assets, and

01:16:34.000 | I apologize if this question is going to ask, this is the first few minutes of the call.

01:16:38.880 | You know, I don't totally ascribe to the Dave Ramsey mindset, but I do think, I always hear

01:16:43.400 | him talking about growth funds and income, international, all that jazz.

01:16:47.120 | I wondered if you had any resources as to the best way to identify good growth funds,

01:16:52.800 | whether it be books or articles.

01:16:55.800 | Obviously, specifically growth stocks are just those that don't really pay dividends.

01:17:00.160 | I wondered if you could just shed some light on a more aggressive investing approach as

01:17:07.960 | we, I think, you know, those opportunities are going to be there.

01:17:11.880 | Sure.

01:17:12.880 | So, the thing that's always been weird.

01:17:15.360 | So, does Dave Ramsey, to your knowledge, does he still recommend when he talks about mutual

01:17:20.080 | fund investing, he used to say his recommended portfolio is that you put together a portfolio

01:17:25.400 | of growth, growth in income, aggressive growth, and international, and basically that you

01:17:29.720 | divide it 25% between each of those or something like that.

01:17:33.120 | Is that still the language that he uses currently to your knowledge?

01:17:38.000 | That's correct, and I'm not, it's definitely still current.

01:17:40.640 | I'm not necessarily looking to follow that exactly, but I definitely think there's some

01:17:45.760 | efficacy to growth stocks.

01:17:48.760 | Okay.

01:17:49.760 | So, this has always been something that I've never understood why he uses those words,

01:17:53.880 | because if you go to any non, you know, Dave Ramsey ELP, and you say, "I want to buy some

01:18:00.600 | growth.

01:18:01.600 | I want to buy some growth in income.

01:18:02.720 | I want to buy some aggressive growth, and I want to buy some international," with the

01:18:06.080 | exception of international, those just simply aren't really categories that are used, generally

01:18:12.960 | speaking, in the mutual fund industry.

01:18:17.680 | It's not that, they do make sense to some degree, but they're not the way that mutual

01:18:22.040 | fund portfolios are usually constructed.

01:18:25.320 | Usually the way that mutual fund portfolios are constructed, the much more common classification

01:18:30.560 | of mutual funds is, you know, large cap, mid cap, which stands for capitalization, the

01:18:36.280 | size of the fund, small cap, etc.

01:18:39.480 | And so, it's kind of weird.

01:18:40.480 | You know, when I was a financial advisor, I used to think, "How would I create a portfolio

01:18:44.760 | that matched this model fund?"

01:18:46.700 | Because it's just not, it's not language that's really used in the market out there, abroad.

01:18:53.640 | Now, if you start reading mutual fund prospectuses, you do find that the mutual fund prospectus

01:19:00.160 | is very clear about the investment objectives of the fund.

01:19:03.160 | So you'll see prospectus language that says, "This fund pursues investments in companies

01:19:10.560 | that have a significant potential for growth."

01:19:13.760 | Or you'll see, "This fund invests in mutual funds that have a mutual funds that," my legal

01:19:26.120 | prospectus language is failing me, "that pursue stability of value with good dividend payouts."

01:19:33.120 | These are the kinds of things that are used.

01:19:38.760 | And so, back to kind of his four categories, the thing that is the most useful is difference

01:19:46.880 | between growth versus income.

01:19:48.940 | And what that basically comes down to is, are you trying to find companies that are

01:19:53.720 | pursuing the growth of their company and you're hoping to make your investment largely through

01:19:59.480 | something like capital gains, versus are you trying to find companies that will pay you

01:20:04.320 | a stable income?

01:20:06.000 | And so, a balance here would be, on the one hand, you would have a company like Apple

01:20:09.720 | Computer that is seeking to dominate the computer marketplace, and they're not trying to pay

01:20:15.940 | out dividends, they're trying to grow their market share.

01:20:18.760 | And so, somebody who invests in shares of Apple Computer is going for the growth of

01:20:23.560 | those shares.

01:20:24.560 | It's a capital gain investment goal.

01:20:27.920 | And so, that's a growth-oriented investment.

01:20:33.440 | That's different than investing in your local utility company that has a 70% market share

01:20:39.780 | in that local value.

01:20:41.920 | It's hard to conceive of how that company grows a whole lot, but they pay a nice dividend.

01:20:46.040 | And so, that's an income-oriented investment, where what you're looking for is that dividend

01:20:50.460 | or that other blue chip company that pays dividends.

01:20:53.600 | Those are the kinds of...

01:20:55.520 | That's kind of what he's going for.

01:20:57.200 | Now, when you get to it and you say, "Okay, what's the difference between a growth and

01:21:00.320 | an aggressive growth?"

01:21:02.200 | Well, that's a really hard difference to articulate.

01:21:06.080 | Basically, usually, if you are going to try to put that into more normal language, an

01:21:11.400 | aggressive growth fund would be the kind of fund that is pursuing smaller companies that

01:21:17.720 | have the potential to grow a whole lot more.

01:21:20.320 | At least, it's usually considered that way.

01:21:22.680 | So, you might look and say...

01:21:24.720 | I mean, Coca-Cola is not considered a necessarily growth company.

01:21:30.840 | I'm just trying to think of a brand where you would say, "This is a mature company in

01:21:34.880 | a mature market."

01:21:36.440 | And so, we want to grow, but that's different than saying, "We're going to make more of

01:21:42.240 | a speculative investment on a promising drug manufacturer."

01:21:47.200 | We want aggressive growth because we want this drug manufacturer to develop the cure

01:21:53.080 | for COVID-19 and sell it all around the world or something like that.

01:21:59.320 | The key thing is just simply these are weird.

01:22:01.560 | His categories are really weird.

01:22:06.320 | That's why it's hard to go to the marketplace and say, "I'm going to figure out how to buy

01:22:09.960 | these funds."

01:22:10.960 | You can't really do it.

01:22:11.960 | Now, you could sit down with, I'm sure, one of his endorsed local providers and his referral

01:22:15.760 | system that he maintains, and they would sit down and they would show you a portfolio of

01:22:20.480 | mutual funds and they would say, "This is an aggressive growth fund," or, "This is a

01:22:24.280 | growth fund."

01:22:25.280 | And it's not wrong.

01:22:27.520 | It's just weird.

01:22:28.520 | And so, here would be what I would say.

01:22:30.840 | Go to a big mutual fund company that does active investing because Dave is usually,

01:22:37.240 | as far as I'm aware, someone can correct me if I'm wrong, but Dave is usually either at

01:22:42.280 | least okay with or a proponent of active mutual fund investing, last I heard.

01:22:47.080 | And so, go to a company like American Funds, big name in the mutual fund space, in the

01:22:53.600 | active space, and start downloading their prospectuses for their funds.

01:23:01.840 | What you'll see is that they will have their funds listed in this category.

01:23:08.120 | Download the prospectus for the investment company of America, one of their most famous

01:23:12.240 | and oldest funds, and just read the prospectus.

01:23:15.880 | Start with the sales literature, but then read the prospectus, and you'll start to see

01:23:19.680 | how the prospectus lays out very carefully what the investment aims of this fund are.

01:23:25.000 | And then grab one of their international funds and get an idea of what they're doing, and

01:23:29.920 | that will start to give you the education that you need to think about what your personal

01:23:35.120 | goals are.

01:23:36.120 | Now, when you go back into talking with a financial advisor, you're going to get, and

01:23:40.320 | you ask for a portfolio recommendation, you're going to get a portfolio recommendation that

01:23:45.600 | says, "We think that you should have 32% of your investment in large cap mutual funds.

01:23:50.840 | We think that you should have 15% in mid cap, and we think you should have 10% in small

01:23:56.520 | cap, 5% in micro cap, 10% in real estate, 5% in precious metals, whatever."

01:24:01.360 | I lost track of the numbers, but they'll give you that based, and then X number of percent

01:24:05.680 | in bonds based upon this risk profile questionnaire.

01:24:09.120 | And then within that portfolio, we're going to take this large cap, and we're going to

01:24:13.040 | diversify it into growth funds versus incomes, etc., and they'll give you basically a standard

01:24:18.400 | boilerplate portfolio.

01:24:20.360 | But after you've read some prospectuses and sales literature, I think you'll understand

01:24:23.960 | those terms a little better.

01:24:25.040 | That's where I would start.

01:24:26.040 | >>James: Great.

01:24:27.040 | That's very helpful.

01:24:28.040 | Thank you.

01:24:29.040 | >>Steve: My pleasure.

01:24:32.400 | That's it for the callers on today's show.

01:24:34.920 | Let's see.

01:24:35.920 | I had a couple people hang up, and it looks like they didn't come back.

01:24:37.560 | All right.

01:24:38.560 | So, thank you to the callers on today's show.

01:24:40.920 | Man, I hope I've done a good job with my tone.

01:24:45.240 | I hope that I've been clear.

01:24:47.920 | Forgive me if I didn't.

01:24:50.040 | I think that the conversation we had there about panic is appropriate.

01:24:53.840 | We use the word panic and try to use it in different phrases, but if you actually mean

01:24:57.020 | genuine panic, no.

01:24:58.640 | Genuine panic is—I can't think of a scenario when genuine panic is actually useful.

01:25:04.520 | You just want to act when you see a risk.

01:25:09.800 | I still wrestle—I said this publicly before—I still wrestle with how hard it is to say some

01:25:15.520 | of these things in public, knowing that if history is any indication, at least in the

01:25:23.400 | United States, I'm probably overreacting.

01:25:27.840 | There's this generalized idea that, A, things are going to be okay, and generally they often

01:25:33.000 | have been—often, not always.

01:25:35.240 | If we go to a global perspective, then it hasn't always been okay.

01:25:43.000 | And so, I really hope I'm overreacting, and I'm acutely conscious of saying these things

01:25:47.400 | out loud in public, because what happens if I am overreacting, I've overreacted on the

01:25:53.000 | record, and when we go back to business as usual, I've established myself as an overreactor

01:26:02.880 | and the sky is falling, right?

01:26:07.760 | I hate that.

01:26:09.440 | But when I started this show, I promised myself that I would—I knew that I can't hope to

01:26:15.600 | not offend people.

01:26:16.600 | I can't hope to be right in everything.

01:26:18.840 | I'm sure that I'm wrong, and I try to acknowledge when I'm wrong, but for me, when I gave myself

01:26:23.540 | the permission to speak publicly, I made the commitment that I would be honest, and that

01:26:31.200 | if I was wrong, I would simply correct it.

01:26:34.480 | And so, what I'm seeking to do is to be honest, and if I can find—if I'm proven to be wrong,

01:26:42.080 | and/or if I can—somebody can show me where I'm wrong, I'll correct it without problem.

01:26:46.920 | I think it's stupid to ever expect yourself to get everything perfect.

01:26:50.640 | Nobody—nobody does that.

01:26:53.100 | And so, I'm seeking to be honest.

01:26:55.640 | But I think I've done a pretty clear job of laying out the specific risk.

01:27:03.440 | The specific risk is the viral infection.

01:27:08.560 | I think I've laid out pretty clearly and rationally shared with you why that risk is so significant

01:27:21.240 | and where the off-ramp is, right?

01:27:22.700 | The off-ramp to this viral outbreak is a miracle—an effective treatment protocol, which thus far

01:27:30.080 | is unproven.

01:27:31.080 | We're hoping that it's developed quickly, but thus far, it is unproven.

01:27:34.940 | There's no very effective treatment protocol that specifically attacks this particular

01:27:39.720 | virus, right, other than standard treatment protocols, try to give the body the support

01:27:43.560 | that it needs, ventilator support, etc., to fight through it.

01:27:48.580 | I am receiving daily very serious personal messages from people in the medical community,

01:27:56.640 | people with insight.

01:27:57.640 | And by the way, I would solicit those.

01:27:59.520 | I try to listen carefully and then just simply open to things, but I see risk happening.

01:28:13.120 | And so the medical stuff is the easiest to see, because if you see a treatment being

01:28:19.680 | developed, become more optimistic.

01:28:22.340 | To the extent that you don't see a treatment developed, expect this policy of social distancing

01:28:30.820 | at the easiest answer, long-term social isolation, etc., these lockdowns, expect this to be the

01:28:38.800 | tool of choice, because government officials have no other tool.

01:28:44.980 | That's the key.

01:28:45.980 | Imagine yourself as the director of public policy for your country of residence.

01:28:52.480 | What other tool do you have when you know that if you have a large population, millions

01:28:57.080 | of people are going to die from this infection?

01:28:59.000 | This infection is deadly.

01:29:00.160 | It is not just the flu.

01:29:02.260 | And if it gets out of hand, it becomes even more deadly, because it completely overwhelms

01:29:06.980 | the hospital system and all of the medical resources.

01:29:09.880 | It is not the flu.

01:29:11.520 | It is deadly.

01:29:13.420 | So now imagine you're looking at that, and you know that if you don't take action, I'm

01:29:19.440 | going to use millions because of the population of the United States, if you know that you

01:29:23.080 | don't take action, it's very likely that millions of people will die.

01:29:27.980 | You know that if you do take action, millions of people will be hurt economically, deeply

01:29:34.400 | hurt economically.

01:29:37.000 | Those are your two choices.

01:29:38.160 | You're on the horns of a dilemma.

01:29:40.820 | If you do nothing, millions of people will die.

01:29:44.300 | If you take action that you know is effective, it buys you time to find a solution.

01:29:50.900 | It buys you time to find a therapeutic cure.

01:29:53.160 | It buys you time to develop a vaccine.

01:29:55.360 | It buys you time to not have millions of people dying within a period of months.

01:29:58.900 | That's how fast this infection would spread.

01:30:01.480 | It buys you time, but it comes with an economic cost.

01:30:06.440 | So why would you not buy time?

01:30:08.480 | I would.

01:30:10.280 | Now what other choice is there?

01:30:13.920 | That's the only morally right choice is to say we have to do this because it buys time.

01:30:19.720 | Now you know that it comes with a huge economic cost, but the economic cost is an easier price

01:30:26.540 | to have on your conscience than the moral cost.

01:30:29.740 | If you were the emperor of your country and you looked down and you said, "I'm the emperor

01:30:35.340 | and I know that if I take this action, I'll lose millions and millions of people, but

01:30:41.080 | we'll all -- we won't all be rich, but we'll all have sort of kind of have some money and

01:30:45.200 | we'll keep economic activity going.

01:30:47.360 | But if I take this other action and I shut everything down, we'll save millions of lives,

01:30:54.080 | but we might be headed for utter financial ruin."

01:30:59.120 | Which of those choices would you make?

01:31:00.520 | Which of those choices do you want on your conscience when you stand before your maker

01:31:04.760 | and say, "This was the choice that I made"?

01:31:07.180 | Which of those -- when you're grilled for the rest of your life, you were emperor of

01:31:10.760 | the country, you were emperor of the world, and what choice did you make?

01:31:13.680 | Do you want to say, "I tried to save lives and it came with an economic catastrophe and

01:31:17.640 | I overreacted, but at least we're all still alive because the data indicated that it was

01:31:21.240 | going to be really bad"?

01:31:22.460 | Or do you want to say, "Yeah, well, we don't really care that much about lives.

01:31:25.500 | We just wanted everyone to stay rich"?

01:31:27.400 | There is no other choice.

01:31:30.860 | So now put yourself back in that -- you're still emperor of the world or emperor of your

01:31:34.620 | country.

01:31:36.120 | You've got to make this choice.

01:31:37.720 | What do you do?

01:31:38.720 | Well, you know that the single biggest risk is the virus, okay?

01:31:45.300 | You know that the other big risk is the human panic, that if humans start panicking, everything

01:31:50.840 | falls apart.

01:31:52.520 | And then you know that the financial risks are very high, but you hope that with time

01:31:57.360 | you can deal with those.

01:31:59.400 | You can give money away.

01:32:00.880 | You can change laws.

01:32:02.040 | You can make it illegal to evict people.

01:32:03.600 | You can adjust bankruptcy laws.

01:32:05.080 | You can capitalize -- you can nationalize all the debt away, right?

01:32:09.080 | If we could just forgive all the student loans, then why can't we just forgive all the debt,

01:32:13.080 | right?

01:32:14.080 | Why not?

01:32:15.120 | And you have prominent politicians who are making their entire political campaign saying,

01:32:19.960 | "We're just going to forgive student loans."

01:32:21.800 | Well, my question is, if we can forgive student loans, then why can't we forgive credit card

01:32:25.240 | debt?

01:32:26.240 | And why can't we forgive mortgage debt?

01:32:29.800 | And why can't we forgive business debt?

01:32:31.560 | Why not?

01:32:32.560 | If it's good to forgive student loans, to free up students to be able to make it in

01:32:37.800 | America instead of being overburdened by their student loans, then why isn't it a good thing

01:32:41.760 | to go ahead and free up all the homeowners?

01:32:45.640 | After all, just think of how the economy would boom if you didn't have to pay a mortgage

01:32:49.080 | right now.

01:32:50.080 | And if that's a good idea, then why not free up the businesses?

01:32:52.800 | Because if the businesses are servicing their debt, then that just is really hard for them.

01:32:56.200 | So let's just forgive everything, right?

01:32:58.560 | This is the economic system that you're in.

01:33:01.940 | So back to your emperor of the world.

01:33:04.680 | You're desperately hoping to buy time.

01:33:07.260 | You're desperately hoping that if you bring down quarantines, if you say, "That's it.

01:33:12.240 | We're shutting things down," at least you have some time to possibly deal with the economic

01:33:17.060 | outfall of that, right?

01:33:20.440 | At least you have some time for a new therapy to be proven, a new drug to be tried, a new

01:33:24.640 | machine to be developed.

01:33:26.320 | Somehow you have the time to turn all Tesla manufacturers into ventilator manufacturers

01:33:31.100 | and save millions of lives because now we have enough ventilators.

01:33:34.280 | You're trying to buy time.

01:33:35.640 | So you're killing the economy to try to buy time to save human lives, which is the right

01:33:40.080 | decision.

01:33:41.080 | That's the morally correct decision in that situation.

01:33:44.080 | And it's going to be incredibly politically costly because if it works, as it can, as

01:33:50.080 | it will, I hope, as it will, what will happen is that you will have a few thousands or tens

01:33:57.020 | of thousands of deaths instead of millions.

01:33:59.580 | And everybody will tell you that you were an idiot because you killed the economy to

01:34:06.040 | save millions of lives, but millions of people didn't die and it was a complete overreaction.

01:34:12.480 | But at least you'll go to your grave as emperor of the country.

01:34:15.480 | You'll go to your grave knowing that you did the right thing with the information that

01:34:19.100 | you had.

01:34:22.380 | But what's the economic risk?

01:34:23.880 | Well, the economic risk is unknown.

01:34:29.380 | Now is it possible there's a perfect dance?

01:34:32.420 | Is it possible that the government can magically do all these things?

01:34:37.540 | Sure.

01:34:38.540 | Sure.

01:34:39.540 | Sure.

01:34:40.540 | Sure.

01:34:41.540 | Sure.

01:34:42.540 | Sure.

01:34:43.540 | Sure.

01:34:44.540 | Sure.

01:34:45.540 | There were a lot of people that predicted the end of the world in 2008.

01:34:46.540 | If we give away trillions of dollars in bailouts, it's all going to fall apart.

01:34:47.540 | Well, it didn't.

01:34:48.540 | So there's a good chance it doesn't now.

01:34:50.500 | And man, I hope that's right.

01:34:54.620 | But on the other hand, you should see that there are some fundamental rules in the world.

01:35:02.060 | There are some fundamental laws.

01:35:04.380 | But those laws depend on human psychology.

01:35:08.960 | If you were to go back to 1950 and you were to go to an economist and you were going to

01:35:14.260 | say, "Listen, you know what we could do?

01:35:16.240 | We could just end the gold standard and we could just get rid of the connection of the

01:35:22.900 | dollar to gold and it'll be great.

01:35:26.020 | And you know what?

01:35:27.020 | It'll never fall apart."

01:35:28.020 | You would have had everyone say, "Are you crazy?

01:35:29.020 | No, of course we can't do that."

01:35:30.900 | Except some people said you could.

01:35:32.460 | So then it happened, right?

01:35:33.460 | You end the connection to gold, right?

01:35:34.900 | Now you have complete and total ability with the government, completely unconstrained by

01:35:39.020 | any connection to a physical substance, which allows politicians to say, "Well, you know

01:35:46.920 | what?

01:35:47.920 | We can give you money.

01:35:48.920 | We can forgive this.

01:35:49.920 | We can nationalize this.

01:35:50.920 | We can give that away here.

01:35:51.920 | We can take this industry over.

01:35:54.280 | We can spend more."

01:35:55.700 | And those politicians come to power.

01:35:57.440 | And other people look around and say, "You know what?

01:35:58.920 | The way to come to power is to say, 'Vote for me.

01:36:00.800 | I'll forgive all your student loans.'"

01:36:02.660 | And it works.

01:36:04.440 | And you go through an entire generation.

01:36:06.080 | And you had all the doomsdayers, all the doomsayers and doomsdayers saying, "Well, the government

01:36:11.480 | might one day owe a trillion dollars of debt, and that'll be a catastrophe."

01:36:15.960 | Then you get past a trillion dollars of debt, and it's not a catastrophe.

01:36:18.440 | "Well, maybe it'd be ten trillion."

01:36:20.000 | And it's not a catastrophe, and nothing falls apart.

01:36:22.760 | And so what happens is this feeds this idea.

01:36:25.800 | There's no limit.

01:36:27.520 | There's no limit.

01:36:28.520 | Well, I ask you the question, what do you believe?

01:36:33.880 | Do you believe there's a limit or there's no limit?

01:36:40.760 | The answer to that question is probably going to make it your next course of action obvious.

01:36:47.200 | I don't know what the limit is.

01:36:49.440 | And man, I hope that limit isn't reached this year.

01:36:52.960 | I have told my wife, and I can't get any more honest than what I said.

01:36:59.960 | I've told my wife, I said, "Listen, I think that within our lifetime, I think within our

01:37:05.800 | lifetime we're going to see massive change."

01:37:08.600 | And my best estimates have always been at some point in the coming decades, notice all

01:37:13.680 | the room I give myself, at some point in all the coming decades, this financial and economic

01:37:22.000 | system, it has to come apart.

01:37:27.680 | Now what I'm hoping is that it comes apart very slowly, and that it comes apart with

01:37:33.440 | room to unravel.

01:37:36.720 | And so you can have some bankruptcies here, you can have some changes there.

01:37:39.920 | Just like when you solve government finances, how do you do it?

01:37:41.840 | Well, you do it in bankruptcy, right?

01:37:44.060 | But that bankruptcy ideally is a whole lot of little bankruptcies.

01:37:47.520 | Okay, we're going to means test Social Security.

01:37:49.680 | So if you have more than $300,000 you're no longer getting, or a million dollars, you're

01:37:53.240 | no longer getting Social Security.

01:37:54.240 | And then three years later, well, that was too much.

01:37:56.200 | So if you have more than $500,000 you're no longer getting Social Security.

01:37:59.640 | Or if you have this amount of income coming in, now you have to pay more money for Medicare,

01:38:06.060 | or we're going to tighten this.

01:38:07.060 | And when you do things little by little, incrementally, then you can soften the pain.

01:38:11.800 | If you elected Joshua, Emperor of the World, and you know that Joshua would like to end

01:38:16.400 | all that stuff, theoretically, right?

01:38:19.220 | But Joshua as Emperor of the World would never come in and say, "Let's cut it.

01:38:22.880 | Let's just cut it all right now."

01:38:24.280 | That is awful.

01:38:25.280 | That is terrible.

01:38:27.080 | Any parent in the world knows you don't do that to your children.

01:38:30.280 | The worst thing in the world that you do as a parent is if you ever go in and your children

01:38:33.800 | are playing happily at the park, and you walk in and you say, "Children, stop right now

01:38:38.460 | and go get in the car."

01:38:40.460 | Your children melt down, right?

01:38:43.020 | And so you learn as a parent, one of the first lessons you learn, you don't do that.

01:38:46.680 | You set expectations for your children.

01:38:48.720 | You set expectations and you say, "Listen, at this time we're going to go."

01:38:53.200 | And then I always give a five-minute warning, right?

01:38:55.800 | And I want them to respond properly no matter what.

01:38:58.200 | If I say, "Stop playing, get in the car," I'd like to hear a chorus of "Yes, sir, daddies,"

01:39:03.080 | and my perfect, obedient little children trot happily with good attitudes to the car.

01:39:09.360 | I'd like that.

01:39:10.360 | We're not there.

01:39:11.900 | Maybe someday we will.

01:39:12.900 | Who knows?

01:39:14.120 | That's the goal, but of course we never get that.

01:39:16.360 | So what do I do?

01:39:17.360 | So I give warnings and I say, "Okay, five minutes."

01:39:19.880 | And I set expectations in advance of here's what's going to happen.

01:39:23.120 | That's effective leadership, is you do your best to set expectations.

01:39:26.520 | Now if it's an emergency and the children are going to get mowed down by an incoming

01:39:30.160 | asteroid, I'm going to say, "Go to the car," and when they start crying, I'm going to yell,

01:39:34.400 | "Go now," and probably the fact that I'm yelling is going to spur them to action.

01:39:38.800 | I don't yell.

01:39:40.240 | And they're going to be so scared that they're going to just run, but that's what's required.

01:39:44.820 | And so what you look for and you hope for is incremental change over time.

01:39:49.440 | And so what I have hoped for as long as incremental bankruptcy, incremental adjustments.

01:39:55.920 | That's been the idea.

01:39:58.240 | But that doesn't account for a genuinely serious global viral infection.

01:40:05.600 | That doesn't account for the possibility of going from 3% unemployment one week to three

01:40:11.480 | weeks later, 20% unemployment.

01:40:15.160 | That's a shock that is insane, insane.

01:40:19.440 | That is unprecedented in human history.

01:40:23.560 | And so when something like that is unprecedented, it has unprecedented results.

01:40:29.360 | Now we all hope that you can soften the landing.

01:40:34.040 | Maybe the government can soften the landing and give $2,000 away to everybody.

01:40:37.420 | Maybe the government can bail out all these people and whatnot.

01:40:39.960 | I sure hope so, because I want to live in that world.

01:40:43.360 | I do not want to live in doomsday world.

01:40:46.160 | I don't like it.

01:40:47.160 | It stinks.

01:40:48.160 | I hope it's that way.

01:40:50.520 | But at the end of the day, I still have a responsibility to my family, my wife, my children,

01:40:56.240 | my extended family.

01:40:57.320 | I still have a responsibility to my neighbors.

01:40:59.120 | I still have a responsibility to you to try to find your best path through it.

01:41:03.160 | And you don't get to choose whether you live in the roaring nineties or whether you live

01:41:06.860 | in the plague-ridden twenties.

01:41:09.520 | What you have to do is you have to respond to the evidence that you see.

01:41:16.520 | That's all I got.

01:41:30.360 | I will be thrilled if I'm wrong, but that's what I see.

01:41:34.320 | Watch the news carefully.

01:41:36.120 | Take prudent precautions in your own life.

01:41:39.960 | Consider what you can do day by day.

01:41:42.880 | Do not panic, but respond to the things that you see.

01:41:48.200 | In the worst, if you're wrong and you've responded, you've thought it through in your head, if

01:41:51.920 | you've taken certain actions, if you're wrong, there might be a small price to pay for that.

01:41:57.320 | I think I've done it in the examples that I've given.

01:41:59.720 | I think I've tried to give fairly prudent examples.

01:42:03.080 | If you bought food, okay, worst case is you eat it or you give it away to somebody who

01:42:08.280 | needs food.

01:42:09.440 | Worst case is you feed it to your chickens.

01:42:12.360 | I'm about to go, when I close this show down, I'm about to go buy more food.

01:42:18.400 | Worst case scenario is I feed it to the chickens and it gets used up.

01:42:23.280 | It's not a big financial cost to me in terms of my overall financial picture, but it helps

01:42:31.560 | me sleep better and it's insurance.

01:42:34.280 | So I go here, I'm going to go get more money out of the bank.

01:42:39.720 | What's the cost?

01:42:40.720 | It's just insurance.

01:42:43.040 | The biggest cost is maybe I've sparked a financial panic here.

01:42:46.560 | I sure hope not.

01:42:48.440 | But with the pace of change right now, the things that I never would have imagined, that's

01:42:53.920 | not true, I would never have believed three weeks ago that I would record the show that

01:42:59.840 | I just have because of the risk to me.

01:43:05.440 | Professionally I would never have believed it.

01:43:06.480 | I could imagine it because I've imagined the scenarios and I've done courses on this stuff

01:43:10.720 | for a long time.

01:43:11.720 | I've thought about this stuff for a long time.

01:43:13.480 | I never would have believed it.

01:43:15.400 | Well, you just heard it.

01:43:18.360 | Thank you.

01:43:19.360 | May you have a good weekend.

01:43:22.720 | Try to take all the good that you can out of this stuff.

01:43:27.400 | If you respond to circumstances early, then you can get good growth out of it.

01:43:34.960 | You can get good benefits out of it.

01:43:36.960 | I know that this is a sober show.

01:43:38.280 | I know this is a sober tone.

01:43:41.040 | I remain generally optimistic.

01:43:42.480 | One of the things that you see is in human ingenuity is you see opportunities.

01:43:47.160 | Even in a worst case scenario, let's say that everybody goes bankrupt.

01:43:51.840 | One of the things that happens is in the same way that when a fire sweeps through a forest,

01:43:56.920 | it leads to new and fresh growth, when you have massive times of financial panic, there's

01:44:03.480 | a cost to it.

01:44:04.480 | People die.

01:44:05.480 | Genuinely, I'm not being hyperbolic.

01:44:07.920 | People die.

01:44:09.560 | But there also is in the wake of it new opportunities.

01:44:13.000 | If you've ever worked with somebody who has gone through bankruptcy, bankruptcy gives relief

01:44:18.560 | to people in a way that is powerful.

01:44:23.520 | Bankruptcy can also give relief to governments.

01:44:26.980 | Bankruptcy can give relief to all kinds of things.

01:44:31.920 | Now those things can be painful, but bankruptcy can give new relief.

01:44:35.800 | So just the metaphor of a forest fire is an appropriate thing to think about.

01:44:39.840 | The forest fire looks like an awful thing.

01:44:43.360 | If you're standing in it and it's coming up the hill and you're about to die, it is an

01:44:46.960 | awful thing.

01:44:48.960 | But the forest fire also gets rid of all the old dead wood, gets rid of all the old dead

01:44:59.480 | wood.

01:45:00.480 | It sparks new life.

01:45:01.480 | It opens up the canopy.

01:45:02.480 | It allows the forest to regenerate itself.

01:45:05.000 | And that's what even happens with governments.

01:45:06.440 | When you study all the governments that have gone bankrupt and have defaulted on their

01:45:09.400 | debt, it gives new ability.

01:45:10.880 | It gives new life.

01:45:12.420 | And so if that's the United States, again, I still think it's premature.

01:45:16.560 | I don't think we're there.

01:45:18.120 | I do not believe that.

01:45:19.160 | I don't think that.

01:45:20.680 | But trying to stay ahead of at least a few weeks ahead of the curve, if that's the United

01:45:27.240 | States, okay.

01:45:29.900 | If you're prepared to feed your family, if you're prepared to unite with your neighbors,

01:45:36.480 | you're prepared to do that, it can be the kind of thing that leads to opportunities

01:45:41.220 | on all sides.

01:45:42.220 | There's no reason to be...

01:45:43.600 | There's reason to be optimistic.

01:45:46.680 | It's interesting, this morning Carl Richards, who I really like, he's been on the show,

01:45:50.840 | he wrote the One Page Financial Plan.

01:45:52.200 | He's a financial advisor.

01:45:53.200 | He's most famous at this point for being the New York Times sketch guy where he writes

01:45:57.640 | all these sketches about...

01:46:00.680 | He's so good at just taking a concept.

01:46:03.120 | And Carl is committed, deeply committed, which I appreciate as I am as well, to being a voice

01:46:07.360 | of positivity in a difficult time.

01:46:12.680 | And so this morning Carl wrote a tweet.

01:46:15.880 | He said, "I have no idea how, I have no idea when, but listen to me my friends, things

01:46:22.120 | will get better."

01:46:23.120 | Now that's very true, right?

01:46:25.600 | Wouldn't you agree?

01:46:26.760 | If you're older than eight, you know that life gets better.

01:46:30.200 | It gets worse, it gets better.

01:46:31.960 | Life is filled with cycles.

01:46:33.640 | And so Carl says, "I have no idea how, I have no idea when, but listen to me my friend,

01:46:38.800 | things will get better."

01:46:39.800 | I love that.

01:46:42.040 | I responded and I said, "Sure, but they can also get far, far worse for a very long time

01:46:49.440 | before they get better."

01:46:52.280 | Now that's not quite as fun and as happy, but it also happens to be true.

01:46:57.280 | Because if you're over the age of eight, you've probably also noticed that in your life things

01:47:01.040 | can get far, far worse for a very long time before they get better.

01:47:06.260 | And I don't want to be an optimist who just simply always believes that, "Hey, everything

01:47:10.640 | is going to be great."

01:47:11.640 | That's stupid.

01:47:12.640 | I also don't want to be a pessimist who just believes everything is going to be bad.

01:47:16.960 | That's stupid.

01:47:18.480 | I want to be a realist who looks at the situations at hand, who looks at the opportunities and

01:47:28.080 | says, "Facing these opportunities, facing these realities, I'm going to behave in the

01:47:36.160 | appropriate way given the risk."

01:47:39.680 | The optimist, the forest fire is coming up the California Canyon during fire season.

01:47:45.960 | You've gotten a notice on the news and an emergency alert on your smartphone.

01:47:50.260 | The optimist looks at that fire and says, "That fire is not going to come through my

01:47:54.440 | house.

01:47:56.120 | I'm just going to stay here and believe the best.

01:47:57.960 | I'm going to think positive thoughts in the face of that forest fire."

01:48:02.080 | The pessimist looks at the fire and says, "I've just got to sit here because that fire

01:48:07.320 | is coming so fast I can't get away.

01:48:09.480 | So I'm just going to sit here and die."

01:48:12.600 | The realist looks at the fire, looks at their car and says, "I don't know if I can make

01:48:17.360 | it or not, but I am getting out of here if I possibly can," and goes as fast as they

01:48:22.720 | can to the car and runs.

01:48:26.800 | And then the realist adjusts along the way.

01:48:28.360 | If they realize they can't outrun it, they look desperately to figure out, "Is there

01:48:31.280 | a way that I can survive this thing?

01:48:33.360 | Is there a body of water that I can throw myself into and is there a way that I can

01:48:36.440 | survive the deprivation of oxygen or is there a way, what can I do along the way?"

01:48:40.280 | That's realism.

01:48:41.880 | So optimism and pessimism are both intellectually stupid.

01:48:46.640 | Forgive the hyperbole.

01:48:50.120 | I just don't know a better word.

01:48:51.880 | They're intellectually stupid.

01:48:54.120 | Take the realistic path.

01:48:56.120 | Take a firm look at the world.

01:48:58.360 | Take a firm grasp on reality as best you can.

01:49:01.200 | Listen to multiple voices.

01:49:03.240 | Ask people to defend their arguments.

01:49:05.460 | Give you the reasons why.

01:49:06.920 | And then look at your life and take whatever actions you believe are appropriate in light

01:49:11.880 | of that.

01:49:12.880 | That's the best I got for you.

01:49:15.720 | Have a good weekend.

01:49:16.720 | I look forward to speaking to you next week.

RPF0710-Friday_QA-Please_Listen_SERIOUS_Financial_Concerns_Discussed__Analyzed