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My name is Joshua, I'm your host, and today we're gonna talk about the rough economic, fiscal, and monetary waters ahead. Wish I had a more positive topic, but that's what we gotta deal with today. Thankfully, I will share with you that I have arrived back home from my travels, and so I did make it home to be back with my family, and certainly I cut it pretty close.

I don't know if I was wise to take a trip right in the middle of the chaos that I saw coming or not. I thought I had enough time, and I thankfully did have enough time, but it was certainly an interesting, caused me to feel exposed to be away from the family and not sure with all the increasing travel restrictions whether I was gonna make it home or not.

So I did make it home, and I've been busy, busy, busy the last couple of days doing kind of some next step preparations, which I won't talk too much about in this show, but I've just been busy getting ready for the next step ahead. Today I need to work very quickly, and so I'm gonna talk primarily about the economic, fiscal, and monetary path ahead, but we do of course need to understand first where we are with the current event.

Obviously, the event that is causing this economic difficulty is the virus, the viral pandemic, COVID-19, as it is expanding all across the world. Now, the good news is you can be confident that at some point in time this virus will end, this pandemic will end. The unknown is how it will end and how long it will take.

Certainly at this point I would say at minimum we're looking at a couple of months of this kind of hardcore lockdown. We can see if the data from China is reliable, and if the data from South Korea, which is where we have better data that's more reliable than the Chinese, if the data that we're getting is reliable, we can see that there is a path to stopping the massive proliferation and explosion of this particular disease, and that path involves severe social isolation.

That is the most reliable path to stop the spread of a viral pandemic, which is why social isolation and social distancing is so important. At this point, my family and I, we are locked down in our compound here. We're not going anywhere, we're not doing anything. I may still go to the farmer's market and get groceries.

That's where we get the majority of our groceries from the farmer's market. That seems like a modest risk activity. It's an outside market, it's not inside of closed space, so I really don't wanna start eating storage food if I don't have to, but we've canceled everything else, and so we are at home, and hundreds of millions of people all around the world are doing exactly the same thing.

They're just simply sitting at home. Now, this certainly feels silly. It feels unnecessary because you look down and you say, okay, so there's 150 or 180,000 people sick that we know of for sure, and there's some tens of thousands of people who are severe. It seems silly to lock down the lives of billions of people, and yet we know that this is necessary in order to stop the spread of the virus.

The major risk factor that is different from past pandemics is simply the mobility of people throughout the world. If we were to go back to the 1600s or go back to World War I, the great Spanish flu, people moved around the world, but fairly slowly, even though people were moving around the world a lot during the 1918 Spanish flu, it was still generally at the speed of a ship or generally at the speed of a train.

Today, there's such a tremendous flow of people via airplane all around the world that the whole world has to respond at once, and so that's what we're seeing right now. The good news is this works, this works. If I'm not sick, right, if I didn't get sick in my travels, hopefully I didn't, but that's another reason why we are in quarantine, 'cause if I got sick in an airplane or in the airport, I don't wanna pass it along to any of my neighbors, but if I'm not sick and I just simply sit here in my house and do nothing that brings me into physical contact with another human being, I'm not going to get sick.

Now, how long that's practical depends, right? I can certainly do that for months. I can sit here and I can work, and I can, we have enough food, we can stay here for months. I don't have to go anywhere, and so many people can do that as well, and the risk is relatively modest.

Even if you live in a big city and you just leave the house to go to the grocery store, you'll see grocery stores continuing to expand their limited hours. You'll see grocery stores continuing to limit the number of shoppers at one time. This is both to, in addition to their rationing, which they're doing right now, this is to extend the supplies of food.

It's also to minimize the amount of human contact. I'm thrilled to see grocery stores coming out with policies such as reserving their first hour of open business to high-risk individuals. They can go through the store at night, they can restock the shelves with the supply that they have available, they can clean and disinfect everything, disinfect the carts, clean everything, and then allow elderly people or high-risk individuals in to shop when everything is clean.

I think that's wonderful, and I think you'll see more and more things like that happening. So this social distancing strategy works. It's basically the only strategy that's pretty much guaranteed. The problem and the question comes down to how does it end? There are a few ways that it could end.

It can end by just simply the health officials being able to get on top of the individual cases, the people who are actually infected. This comes if you have widespread testing and the people have confidence in the test results, then the social distancing can be enacted simply through just quarantining the infected persons, and many other people can go back to their lives.

You see, that's what has happened in China. Now that China has done extensive testing, they've instituted a mobile application using the data that they have on all of their individual citizens, demonstrating high-risk versus low-risk individuals. And so if you're gonna go and get on the train in China, you have to show your mobile app that's tracking your every move, and it says, "Yes, I'm low-risk, "and I can go on the train." That's why they're getting life back to productivity and back to generating some economic activity, back to some semblance of normal.

Now, will that happen in the United States of America? Maybe, have a hard time seeing it. Will that happen in India? Have a hard time seeing it. Will that happen in Nigeria? I have a hard time seeing it. Will that happen in Mexico, in Canada? It's a little bit different.

China has inoculated its citizens to be comfortable with government oversight of everything. For years now, they've been running the social credit score. And so individual citizens in China are used to having every detail of their life managed by the government. I'm not putting an app on my phone. I don't care what public health benefit there is.

I'm just not gonna do it. I don't trust any government official that much, and I think that I'm well-warranted in that suspicion. And so you even see the US government trying to get more data. If they do that, I won't have a phone anymore. My phones will be sitting in a Faraday bag, and I won't even be touching them.

I just simply do not trust that. I think we have far too much historical evidence of how that data is exploited. And in the past, it was, when we see the destruction that happened in the past, you think back to Germany prior to World War II, and how the development, IBM and the computer systems that they developed and the census that they accomplished, and how that was used to almost exterminate an entire religious and ethnic group of people.

It's just the historic, I'm much more fearful of that than I am of a virus. If you think back to how the census data was used in the United States to lock up the Japanese during World War II, it's just, those things are so obvious that it's, to me, I think it's absolutely foolhardy to participate in any kind of system like that.

Even though the Chinese are currently using it to stem the flood of the virus, I don't deny that it can be useful for that, but it's, they've also been systematically locking up and exterminating religious minorities, Christians, Muslims, and they've been doing that for decades. It's just, it's horrific. And so, if you care about human rights, I don't see how you ever give any government that kind of power.

So, I'm not gonna be participating in those kinds of things. I don't even participate in a census. So, if you're gonna participate in a census, the only thing you should do is simply, the only thing that is legally required is you say, this is the address and this is the number of persons involved.

That is it. That's all the information that your government needs from you. It's just simply the number of persons there. That way, they can appropriately set out congressional districts, that they can appropriately choose the number of congressional representatives for each state, for each district. That's it. It's just a population count.

And there's no data more than that that's needed. And there is major danger of providing that detailed level data. The historical analogs are just simply horrific when you study them through. Forgive the tangent, but back to the task at hand. So, the good news is that the crisis will end at some point.

So, it can end with social distancing being effective enough to get on top of new cases and it can start to be quarantined down. You see this in successful disease management, even with diseases like Ebola. Once they're able to get ahead of the community spread, you can start to stamp it out.

It could also end with improved therapeutic treatment. The therapeutic treatment could sufficiently be effective. New drugs could be developed that are effective in beating the infection. It's possible it could be treated with some sort of vaccine, if that were developed and if it were considered to be safe and if there were widespread development of it, then that would be a possible outcome of it.

Or it could just simply be managed with a continual low-level scenario in which the medical infrastructure was able to handle the number of serious critical cases and most people say, "I've gotta get back to work." We don't know. I don't see how the viral event is anything less than a couple of months, though.

As I've watched the timing development, for example, you see leaders of nations, the president of France, the president of the United States, say, "We've gotta go on lockdown for 15 days." I think that's good and 15 days is probably good. I don't think 15 days is gonna eventually be long enough just simply because it will have an effect, but probably when you get to the end of 15 days, they're gonna say, "We need a little bit more time." It would seem if we study the lessons learned in Wuhan, it would seem that a month would be kind of the minimum.

And then for time to get back, even if a month were able to completely stop the spread, you had total complete compliance, which is a big if, a big question mark, it still seems a little bit short. A month seems to me to be the minimum. And I think that the government representatives who are trying to manage it probably know that, but they're not sure of it any more than I'm sure of it.

They're thinking, "Let's start with 15 days. "It's easier to announce 15 days "than it is to announce two months." And so then people that in terms of social management, the biggest danger in a situation like this is human psychology, panic that destroys the supply lines, everything. Just the contagion of human psychological panic is the number one risk.

And so they're trying to manage that. And government officials know that they can't simply lie anymore. They can't say, "Oh, it's not a big deal. "We're gonna beat this virus back "and we're well on top of it." They know that that is not gonna be believed. And so now their public position has to go to, this is a serious problem.

But then little by little, they ramp up the potential effects. And so you start to see government officials giving more serious warnings. And that gives time for the human population to come to terms with the seriousness of the event. So that's what you're seeing right now. Now, your guess is as good as mine, but in my mind, I would say I see a minimum of a couple of months.

Now, I do think a lot can change in a couple of months. Possibly we'll get some relief due to warmer weather. That might have some impact. Possibly we'll be able to get on top of the quarantining. Possibly new therapeutic methodologies will be developed by the doctors who are studying this.

Two months is a lot of time for things to happen. And we'll come up with some new solutions and new opportunities of things that could happen, possibly. But we don't know. So maybe this is longer term. But even a month or two is certainly devastating. Now, I've talked about the economic problems, and those should be by now be completely apparent to you.

You right now have on a global basis, almost every country and every economy in the world freezing a huge percentage of their economic activity. Now, it's not every country yet, but it will likely be every country very soon. About the only countries that can be spared would be countries that took very early action to close their borders.

I think this is what you see happening in Russia, for example. Russia has continuing to experience strong economic activity. And I think that's for two reasons. Number one, Russia has very difficult border controls with a lengthy visa process for anybody who wants to come. And so there are only a small number of countries that can travel to Russia with visa-free access.

And most people have to go through a process of visiting Russia by obtaining a visa. And that process takes generally at least a week or two, a couple of weeks to finalize. And so there are fewer people, there's fewer people traveling in and out of Russia than there is in other places.

In addition, Russia was very quick to close their borders completely. They sealed off their border with China. And at this point, they've been very quick to close other things. And so I think they got ahead of the curve by locking down people coming in. Now, that assumes that the data is accurate.

I don't have any reason to believe it's not, but we'll see in time. And so a country like Russia can still be at that initial phase where they're just simply containing the individuals and they don't have to lock down all of the economy. And so, and that's, if that's true, if they've been able to quarantine the individuals, there's no reason why they would have to lock down the entire economy.

If you have a nation, and if that nation has sealed borders with no people coming in and no people going out, and the virus is outside of the borders, except in a few, several dozens of cases inside, and those people inside the borders are quarantined, and if all the people that they've come in contact with are quarantined, then that can be sufficient to stop the spread of a viral pandemic.

And that's what countries tried in the beginning. It's just simply that in many countries, there was not enough testing and there was too many people infected. And once you get to thousands of thousands of people infected, there's just no way to pursue that strategy anymore. And so the locking down the borders, that's happening all around the world.

Point is that you can see this is obviously economically devastating, completely devastating. And this is only just getting started. Now, I've spoken extensively in previous shows about the economic impacts. You can see that happening right now. Our neighbors are hurting. There's no other way around it. Our neighbors are hurting.

But it's only just getting started. If you actually look at what's happened, very few people have actually missed their first paycheck. People are starting to get laid off, but there's still, you're being paid for the work that you did a week or two ago. It's only getting started. And so we're still at a situation, we're still in a scenario in which the actual effects are not being really felt yet.

Many employers are still trying to keep their staff. Many employers are still trying to say, well, let's cut overtime. Let's keep staff, et cetera. Some employers have reserves. They're trying to figure out how to keep those reserves. They're figuring out what they can do that's just a minimum amount to keep their employment staff.

But we're just getting started. And I think you need to honestly recognize that fact. This is just getting started. It may feel exhausting by this time, but we're just getting started. And so the rippling effects are gonna continue to be felt broadly, broadly, broadly. If you're a landlord, for example, and you make your money collecting rents from your tenants, it's unlikely that any of your tenants have missed any payments yet.

There's not really any reason except for the moral hazard of new laws, which we'll come to in a moment. But it's just getting started economically. Now, my concerns economically have been extremely high for a while, but now my concerns about monetary and fiscal policy are growing. And I think you need to think, we need to talk briefly about this because you need to understand how severe this is.

I'm going to differentiate fiscal policy versus monetary policy. This is normal in macroeconomics. Fiscal policy is generally considered to be the behavior and the actions of a government in terms of how that government runs their finances. It comes into taxation policy, spending policy, et cetera. That's lumped in under fiscal policy.

Monetary policy is when you have a Federal Reserve Bank, a national bank for a country, like in the United States, even though it's not a governmental entity, it's a private entity, you have the Federal Reserve Board that runs the money supply. And so you see the actions of the Federal Reserve trying to bring in monetary stimulus and trying to bring in cut rates.

They're trying to, eliminating cash reserve requirements for banks, dramatically increasing the amount of money, quantitative easing, various softening of regulations, trying to pump money in, in order to keep employment up and make money easily available so that people will stay economically active, and then to keep inflation down. That's the dual fold mandate of the Federal Reserve.

Now, fiscal policy is the actions of the government. And so you see right now, you see major changes and major cries across the political spectrum for people to do something, do something to relieve the pain. Now, these are very, in some ways, predictable, but this is dangerous territory. And I am deeply concerned about what happens.

Now, you can take a mainstream perspective, and let's assume that you believe in modern monetary theory. You believe that the Federal Reserve of the United States, and I know that you may be an international listener, it's just, of course, being a US American myself, it's very difficult for me to properly understand what the Guatemalan government is doing, while also considering what the Indian government is doing and the Canadian, I cannot, I'm not competent to do it internationally.

So I need to focus on the United States, but you interpret this for your country of residence and/or countries of concern. Let's assume that you believe in modern monetary theory, believe in modern, in the Federal Reserve system, that you believe that the Federal Reserve is a necessary and effective control mechanism that can properly stimulate the economy during difficult times and then properly pull back.

You're a Keynesian through and through, you're convinced that this system works. I'm not, but let's assume that you are. In these kinds of situations, you have to at least admit that this balance, striking this balance is extraordinarily difficult. Figuring out how to do things just enough, but not too much, is extraordinarily difficult.

There are many learned investors, there are many learned economists who applaud the massive action that the US Federal Reserve Board has taken over the last week and is still taking day by day a new announcement comes out. And so there are many people who applaud that as doing the right thing.

And you see that reflected, for example, in the stock market. You'll see big, lots of money here, lots of free money and the stocks go up, right? And then the next day something else happens and things change. So maybe this is all true. Maybe this is exactly what's needed and maybe this is right.

But it's at least extraordinarily risky and extraordinarily delicate to get the balance right. And it's hard for me to believe that the balance is gonna be gotten exactly right. Now, maybe it's just a minor difference, but it's a very, very difficult place to be. Time will tell. I hope that they get it right.

I hope that this is just another bump in the road and we get back to life is good and everything is fine. But we're at the level in terms of the economic risk. This is certainly at the level that comparing it to the Great Depression in the United States is not unwarranted.

Treasury Secretary, Steve Mnuchin, how do you say his name? I don't listen to news. I don't know how to say his name. I just read it, Mnuchin, probably. M-N-U-C-H-I-N, however you pronounce his name. I don't know. He was quoted as using an example case of 20% unemployment and some of his scenarios that he was recently discussing.

That quickly made the headlines about 20% unemployment. Now then, it was quickly walked back. No, we're not predicting this. We're not saying this. We're just saying this is an example of what could happen. Well, this is certainly a valid example of what could happen. If you look around you at the percentage of people who are being impacted by current events, it sure seems like more than 20% of the economy to me.

It sure seems like much more than that. And so to say that that could lead to 20% unemployment does not to me seem to be a stretch. Time will tell. But 20% of unemployment is devastating. It's devastating. That's the level of unemployment that was experienced during the Great Depression in the United States.

Totally devastating. Let me go now to fiscal policy. What concerns me greatly, well, first, what can we be grateful for? We can be thankful that this current economic crisis has come after a period of somewhat strong economy. I think that we would certainly acknowledge that economic activity has been high for the past years.

Unemployment has been historically low for the past years. And this has been great. The stock market was high. People were feeling good. Things were happening. And that was great for a lot of people. And so you would think that hopefully this means that some households were strengthened during periods of high employment.

Perhaps they were able to set aside savings. They were able to engage in prudent planning, et cetera. Now, if you believe that, I don't know where you get that evidence. Because my observation, which is only being strengthened by my opinion, which is being strengthened right now, is that generally the vast majority of modern US Americans at least simply have completely forgotten about the idea of thrift and frugality and saving.

Outside of putting money into a retirement account, it seems as though most people have almost no concept of saving anymore, that everything is fueled by debt. And so I hope I'm wrong, but there's such a tiny percentage of people who probably use that period of high employment to set aside reserves.

And because the saving that most people do is in the stock market, they're hurting. Many people, and especially in the personal finance community, have, "Oh, I've got a three-month emergency fund, "but I've got hundreds of thousands "always in the stock market." That's crazy. Because now your stocks are down 20, 30%, possibly, depending on how your portfolio is allocated, and you've got a mere three-month emergency fund.

Well, three-month emergency fund is good, but if I'm right, and I hope I'm wrong, but if I'm right, all of a sudden that three-month emergency fund starts to feel a little bit light when you look forward at the coming months of potential economic hardship. So, and the number of people with a three-month emergency fund is vanishingly small.

So let's go back to where we were. So good thing is that the economy has been pretty good over the past couple of years, generally speaking. But how good has the budget been for the United States of America? Well, of course, I've talked about this a lot, but I want to emphasize to you that the US government was running this year, prior to the emergence of COVID-19, was planning on a $1 trillion deficit.

The US government, prior to the emergence of COVID-19, was running a $1 trillion deficit during a booming economy. Now what? What happens when now we add everybody clamoring for free money for everyone to that? Where does that come from? The first thing you have to ask is, is it likely that we'll get lots of free money?

I don't see any way to stop it. Generally, historically in the United States, Republicans have had more sympathy for financial conservatism than they have now. That has completely disappeared over the past years. The Republicans oversaw a $1 trillion deficit when they had control of Congress and they had control of the House, sorry, same thing, the House of Representatives and the Senate and the presidency.

They didn't rein in any kind of government spending. They didn't repeal Obamacare. They just continued to spend money like crazy. You have at the head of the Republican Party, you have a president who is not known for his thrift and frugality. And he's very much a populist figure who wants to appeal to the people and he wants to be seen as moving fast.

So you see the headlines. President Trump says, "We're gonna deliver money fast. "We're gonna do it within the next two weeks." Now maybe that's what's needed, right? Maybe I'm completely wrong. I often am, right? Maybe that's what's needed. But regardless, how is somebody gonna stand up and rein that in?

Now on the other side, so on the Republican side, there are no prominent fiscal hawks like there once were. Nobody is loud about stopping that. On the Republican side, Republican congressional representatives and senators have learned that to oppose President Trump is very dangerous politically. And so if President Trump is openly hawking the need for lots of money for Americans, it's hard to see how a Republican stands up and says something against that.

On the Democratic side, there is no, I'm not aware of any prominent Democrat who believes in and advocates for fiscal conservatism in any way. We're going through the last stages of a Democratic presidential primary in which it seems like a race to see who can promise more money, more bigger government programs to anybody.

And so where is the political restraint gonna come in? I even think historically, if you were to go back to 2008 and the financial crisis, if you remember, there was a major outcry on behalf of US American society saying that, "No, we should not bail these banks out. "We should not bail these people out." And the first bill in the fall of 2008 failed, the big stimulus TARP bill failed because of that outcry.

And then all of a sudden, I can't remember which firm it was, somebody went bankrupt, blah, blah, blah. And now everyone said, "Oh, okay, we've got to act." And then everyone started to act and all the Republicans started signing for it and they passed TARP and the big bailout funds against the outcry of the American people.

Now, if you were a politician looking back on that, you would see that, "Hey, you know what, that worked." 'Cause you could make an argument that that worked. You could also make a very strong argument that it didn't, that it just postponed the inevitable, but you could make an argument that that worked.

And what I would say is that it seems to me that there's a very different US general population, a very different citizenry, a very different voter base than existed in 2008. In 2008, you had the Tea Party movement, fiscal conservatism and we're not gonna spend money and no new tax, blah, blah, blah.

2020, where is that? Where are those people? I'm in that camp ideologically. I don't have any friends really that really believe that. Everybody has gone all in on big government. And so I don't expect even that kind of restraint. And so I think that some version of these massive new programs is going to spend.

Now, whether it's $1,000 a month or $10,000 of free money for everyone, something's gonna get spent. Well, now let's go back to the basics of government. Where does the government get money? Let's say you're running the US government, you're trying to sit down and say, how do I increase my income?

Where does the US government get money? Well, it could come from some form of user fees, right? Maybe you fund the national park system by park entrances. That is an almost meaningless number in terms of the global expenditures of the US government. Yes, you have to pay 100 and whatever dollars for a passport and yes, you have to pay to go into a national park system, but user fees are a tiny percentage.

They're almost not even worth thinking about. But yes, user fees do exist. What's the next big thing? Well, taxes. That's where most money comes from is taxes. Even though there's a $1 trillion deficit, there's still trillions of other dollars of tax revenue. Well, what's gonna happen with tax revenue this year?

Because so much tax revenue is tied to income and income taxes fund a huge percentage of the tax base for the US federal government, tax revenues are going down because incomes are going down. Do you think that investors are gonna be paying lots of capital gains taxes on their tax returns this year?

That's where most of the tax revenue is from the wealthy is in capital gains taxes. And where are they gonna be experiencing major capital gains? So capital gains revenues are going down. What about income taxes? Do you think a lot of people are gonna be increasing their incomes this year?

You're gonna have losses everywhere across the tax base. Many business owners are gonna be reporting business losses. Many individual employees are gonna be having severe cuts in income, if not going down to nothing. So you're gonna have major decreases in tax revenue just simply due to the economy being pulled back.

And this is obvious when especially when you base an entire system on income taxes. Now, in addition to that, there'll probably be some version of tax cuts. You've seen proposals about tax cuts on payroll taxes. There'll probably be some version of tax cuts because especially politically, generally Republicans will want to advocate for some form of tax cut rather than just giving away free money.

And so maybe some kind of tax cut proposal goes through. Regardless of any changes in tax code, tax revenues are going down. So that's the big source of government revenue. Tax revenues are going down. Well, remember, we already had a trillion dollar deficit during a good economy. Well, what about the next source?

Well, the next source is debt. The US government can finance its debt, finance its spending through the creation of debt, the purchasing of debt. And I think that this is an area where the debt market will probably continue to be strong. You see that people still believe, many investors still believe in the safety of US federal debt because the US federal debt, the federal government has unlimited taxing ability.

They've never defaulted on a debt payment. And so you'll have the issuance of billions of dollars of new debt. Maybe so, right? That's probably the least damaging for right now because there's still significant room where the government can borrow a lot more money. It's not quite so short term in terms of the amount of money they can borrow.

That's probably least damaging. But then the third area is inflation, right? That's the third way other than, sorry, fourth way, I guess, user fees, taxes, debt, and then inflation. Governments can inflate away their debt by just simply increasing the monetary supply and making their repayment of the debt using less dollars that are worth less.

So if you think about these scenarios, these are what you have to face. Where is it gonna come from? Well, either of those scenarios is bad, meaning the two probable ones, debt and inflation. User fees aren't gonna increase, and those are meaningless anyway. Taxes aren't gonna increase. Nobody, not even the most staunch Democrat during this time of this crisis is gonna go out and say we need to increase taxes, even on the wealthy.

No one's gonna do it. They don't do it during times of crisis. They've never done it. You send me the articles if you find somebody doing it. But when times are booming, then you'll have candidates such as Senator Warren or Senator Sanders or Senator Biden, you'll have these candidates saying, yeah, we gotta increase taxes.

They will not be talking about that anymore. They never do. During times of economic crisis, everyone who's vocal advocate for increased taxation, they kind of quietly close their mouth, just like during times of economic crisis, those who are vocal advocates of cutting government spending go down. Because that's the other side.

I forgot to start there. I talked about revenue. Well, what else could the government do? Well, they could cut services, right? They could cut spending. The problem is that the vast majority of the spending is now non-discretionary. It's required. The vast majority of the government budget is built up on social security, Medicare, Medicaid, and military spending.

Well, where are you gonna have any cuts in those? And people are hurting. So where are you gonna have any cuts? US government doesn't cut spending anymore. And so it just gets worse and worse. So you're gonna have debt and inflation, either more debt or more inflation. Now, if you have more debt, all this does is extend the problem out to farther in the future.

Or if you have inflation, all this does is create more problems. So I know I'm just giving you a long list of problems, but think soberly and seriously about where we go from here and don't be caught unaware. On both the monetary side, you've got potential for huge problems.

And on a fiscal side, you've got huge problems. Now, the interaction of these two things, the monetary side and the fiscal side, is extraordinarily complicated. I hate to talk about it because I've studied this stuff for years and I barely understand it enough to even open my mouth. And I especially am cautious about opening my mouth in public.

Point is that it's rough waters ahead. Very, very rough waters ahead. The most perfect scenario, perfect balancing of monetary stimulus by the Federal Reserve, huge amounts of money going to US taxpayers, the most perfect scenario ahead indicates major increases in debt. Assume that taxes, okay, we deal with that by debt.

Assume that we don't have inflation. The best scenario is major increases in debt. What does that do for the future 10, 15, 20 years from now? Does that make it brighter? Do you honestly believe that somehow something's gonna change and now somebody's gonna come to power that's gonna pay down the debt?

Politically, do you see that? Think back to the shows I did. If you didn't listen to them, go back. The ticking time bomb that no one wants to talk about, not gonna happen. Worst case scenarios, massive inflation. I don't think hyperinflation, maybe it's just my normalcy bias, but I just can't believe the US government gets in a situation of hyperinflation, but at least mass inflation.

And that's the most perfect scenario. Two months shut down, goose things a little bit, give away some free money. And I guess the final thing I would say, give away some free money and then everything kind of gets back to normal. I don't see it happening. I can't really believe that scenario, but that's the best case scenario.

I'll go back one more thing. The single biggest thing that concerns me right now is what is properly termed moral hazard. I'm having a hard time believing the newspaper headlines that I'm reading right now. I was doing a live stream for one of my courses the other night. We were talking about my radical preparedness course.

I was talking with the students and somebody said, "The governor of my state has just canceled evictions, "has just made it possible, "made it illegal to evict a tenant." I asked him what state, he said, "Maryland." I went and looked it up later. Government of the state of Maryland said that if you're a landlord, you can't evict your tenant during a time of national emergency or a state emergency.

You can't evict a tenant. And it said to every single service provider, you can't cut off the service of the local people. You can't cut off somebody's water, somebody's power, et cetera. Now, obviously you can understand the appeal that that has. All of us would understand, "Hey, that sounds pretty good." But just think about that.

Put yourself in the shoes of those people. If I were in the state of Maryland and I knew that my landlord could not evict me, would I pay my rent? I think I probably would, 'cause to me it's a matter of moral duty. I've said I'll pay you, and if not, I've said I'll get out.

I don't care what the law is. But I'm not trying to make myself sound good. I just know that most people don't believe that. Most people aren't in that situation. Why would you pay your rent if you know you can't be evicted? Why wouldn't you just hang on to your rent and keep your rent money and keep the cash in the bank?

You'd be safer that way. Why would you pay your utilities if you know they can't be turned off? Just keep your money and hoard your money. 'Cause toilet paper is one thing, but hoarding cash is far more impactful and far more important if you're actually concerned about the difficult road ahead.

I wouldn't pay my rent in that situation. I wouldn't pay my utilities. I would just wait. They can't shut 'em off. Worst case they can do is impose fees, and they probably won't do that, 'cause that would be politically unpopular. So I'll just pay it later after the crisis passes.

For now, I'm gonna hoard money. Think about the moral hazard of just people wanting money. Where is there any expectation? Again, people haven't even lost paychecks yet, barely. Or if they've lost paychecks, it's one paycheck. And yet, where is the expectation? Where is the moral leadership on behalf of politicians saying, "We're gonna have a hard time, "but you know what?

"You've prepared for this because you've saved money." It's like immediately the whole culture goes to, "Gimme, gimme, gimme. "Gimme, gimme, gimme. "Gimme, gimme, gimme." Now, I've had that basic assessment for many years that we've created a culture that's built upon the foundation of greed. Greed and larceny, the desire for other people's stuff, and greed for more of ourself.

I don't wanna pay for it, I need more stuff. Give me more government services, and that's just what's gonna happen more. Now, if that moral foundation is true, where do we go from here? And then now, what about the war on savers? What if we do go to negative interest rates?

Free money for everybody, cancel student loan interest, cut interest rates to zero. What about those who save money? I have for years believed in the moral rightness of thrift, of frugality, of caring for myself, of planning ahead. And I'm not gonna change that because I don't have any confidence in the ability of someone else to solve my problems.

I have a responsibility to care for my family. I have a responsibility to care for my wife, to care for my children. That responsibility doesn't change whether someone else does it or not. Again, not trying to make myself sound good, but I acknowledge and I know that that's a minority position.

Most people look to someone else to solve the problem and they don't take action. So what do you do when savers don't get any money? That's what's always already been had for the last number of years. The moral hazard here is tremendous. What about even at the corporate level?

You immediately have the airlines coming and saying, well, we need to bail out. Well, why weren't you thinking about that over the last few years when you're doing billions of dollars of stock buybacks? Did you not think it would be a good idea to actually just save some money?

And this goes back to 2008. What did we learn in 2008? We learned that if you're too big to fail, you'll never have to fail. You won't have to go bankrupt. The investors won't have to pay the price. And what do you see happening right now in the market in general?

Well, everyone comes in and says, well, look, we're gonna have a hard times, but the Federal Reserve comes out and says, we're gonna prop you up. The US taxpayer, we're gonna prop you up. And so you have investors all in. And who does this make happy? It makes happy the vast majority of people who own mutual funds in their retirement accounts.

And they have this glib idea that somehow it's all gonna be okay because I'm gonna be bailed out. Now we know that on the periphery, there might be some people that would lose money. Yeah, General Motors went bankrupt and some people got stiffed there. Yeah, Lehman Brothers went bankrupt and Bear Stearns.

Yeah, we know that a few people lost money. But in general, we know that it all just worked out in the end. Now, what I think should happen is I think that you should allow the markets to work. And if Delta Airlines goes bankrupt, I'm sorry, if you work for Delta Airlines, that's unfortunate, but Delta Airlines needs to go bankrupt.

It cleans the market of the dead detritus of these old companies and allows somebody else to come in to buy the airplanes. It allows the company to be reorganized and it works it through. Bankruptcy is the most moral, properly right way to handle it because everybody knows that was the risk.

When you come in with these massive bailouts, it just gets worse and worse and worse and the moral hazard increases. And in the same way that you have the moral hazard of a tenant knowing that they don't have to pay their rent payment and they can't get evicted and knowing they don't have to pay their water bill and they can't have their water shut off, what do you think all the big executives know?

Well, I'm Delta Airlines, I'm too important to fail, I'm too big to fail. And now you see that all across the entire economy. And so from a moral perspective, where is there any right moral thinking on this topic? If I went on a public news program and I said anything like that, all people would say is that I'm just mean and have harsh words, right?

Because you're saying these things that are just mean and can't you see how, you know, can't you just see how mean this is? Somebody should say, you should have saved money. I don't like being the mean guy, but it's true. If you can't pay your rent because you lost one paycheck, that's your responsibility.

I'm filled with sympathy of how difficult it is to make it on a small income, I'm filled with sympathy. I struggle to know how to help people, but the reality is nobody's gonna bail you out. And if you get used to people bailing you out because that's the political winds of the day, what do you do when the money is gone?

This is why welfare is so destructive. It destroys people, why? Because it takes away any sense of self-worth. We all acknowledge that people need help, but we've gone so far past that, societally speaking. We've gone so far past that. It's just simply completely, (sighs) we've become untethered. Now, I hope, for my sake and your sake, I hope that this analysis is wrong.

I hope that it works just one more time. Goose the economy one more time, give everybody $1,000 free money one more time. I hope that the virus is solved in two months. I hope that that is true. If that is true, I tell you what I will be doing.

I will be tripling down on my previous pessimism and preparing for global financial collapse like never before. I felt pretty well prepared, far better prepared than the vast majority of people. But I'm getting ready to record an update for the students of my, how to prepare to survive and thrive during an economic crisis.

I'm getting ready to prepare an update for them and all the things I wish I'd done, all the stuff that I thought was a little too extreme, I probably don't need that, probably won't be so bad. All of a sudden, things can change really fast, as you well know now.

And now I feel a lot more exposed. And I'm not bragging, I'm saying, I am better prepared than the vast majority of people. My day-to-day looks like every other normal day. There's no actual apparent change in our life right now. Now, a month from now, there sure could be.

But these problems are just stacking up. The economic problems are stacking up and it's only getting started. The monetary problems are stacking up and we've only just begun. The fiscal problems are stacking up and we've only just begun. (mouse clicking) This stuff is serious. Again, hope I'm wrong, hope it works one more time.

But there comes a day in which it ain't gonna work. Now, what does that look like? I don't know. I'm thinking about it every day and I just don't, I'm not confident enough to say what it looks like. I'm trying to warn you of what could happen months from now.

I'm trying to warn you of what could happen months from now and give you the things to watch. As I did with the virus, I've said, look for these things. If you see these things happening, it's serious. If you see these things not happening, it's not serious. Well, a lot of the things happened, started to get pretty serious.

Now, we have a chance for the measures to work. The social isolation, it can work. But in the very base situation, the very best case scenario, when social isolation works, it's economically devastating. So now I'm saying the same thing, economically. There are some things that are gonna be done the next few weeks.

Could they work? Maybe for the short term, they might work. If they do work for the short term, they're going to create much bigger problems for the long term. If they work for the short term, they're going to create much bigger problems for the long term. That was the lesson from many people from 2008.

It worked for the short term, and it created much bigger problems for the long term. For years, I have been persuaded that the next recession was going to be more difficult because of what happened last time. And I think you see left, right, and center, if you look around the news, you see right now the moral hazard that was created from the previous event.

You see that moral hazard that was created, and you can see how fast we've gone immediately to give away free money. You can see how fast all the companies came begging for a bailout. You can see how fast, Paul just said, "We'll bail you out, we'll bail you out.

"We've got plenty of money." You cannot just make this stuff up. You can make this stuff up for a little while, but you can't do it forever. If you could do it forever, and this is an event, if you can just make it up, then why not make it up with more?

Why talk about $1,000 a month? It's interesting. Andrew Yang, his signature series. Now all of a sudden, everybody just wants to steal Andrew Yang's UBI idea. If you can send everyone $1,000 a month, why not send everyone 10,000? And hey, I mean, 10,000, I can live okay on 10,000, but if you can send everyone $1,000 a month, and you can send everyone $10,000 a month, why not $50,000 a month?

And the answer to that question is obvious to you, but you don't want to accept it any more than I do. The answer is you can't. And because you can't, you know that this current charade, it cannot continue indefinitely. Now what I have always hoped for is a slow economic crisis, a slow economic collapse, a slow adjustment, because that gives time for people to adjust.

I still think that's possible. You don't have to have a massive all of a sudden collapse. You don't have to have a massive all of a sudden crisis. But when you look around at the speed of change of the last two weeks, you can see certainly that it's very possible that things can happen faster.

I got to end today's show. I got to go work with some clients and make some money. But I want you to be cautious. I want you to be looking around, and I want you to be more pessimistic than most other people. There's no reason to be scared. At the end of the day, you're going to be fine.

Even if you lose all your money, you're going to be fine. Even if you go bankrupt, you're going to be fine. If you can keep your family together, you're going to be fine. I took a shower this morning, I sat there and I pondered bankruptcy. And I thought, okay, I'll go bankrupt.

All my money becomes worthless. What do I do? I'm going to be fine. You are too. I don't have perfect answers on everything. You can work your way through it. One of the things I have learned by studying and seeing real collapses is that life looks surprisingly similar post-collapse as to how it looks now, pre-collapse.

I hope I've been clear. I'm not predicting that in one week, there's going to be a collapse in the United States of America. I'm saying these are very serious systemic problems, and there's no good solution. The only good solution is the one that is politically unfeasible. The good solution is you let bankruptcy happen.

You fight the virus with everything that you can, with the measures that are being put in place. Then you let bankruptcy happen. You let individuals go bankrupt. That individual that goes bankrupt allows them to start afresh. You let the companies go bankrupt. That lets them start afresh. You let people learn from the fact that I should not have lived so close to the edge.

I should have saved more money, because what happened was I lost one paycheck because I worked at a gym, and I lost my job because the gym shut down, or I lost one paycheck because I worked at a restaurant, and the restaurant shut down, or I lost two paychecks, and then all of a sudden everything fell apart.

You let people go bankrupt, and as painful as that is, bankruptcy clears the slate, and it's the proper morally right thing to do. The creditors hurt, so you let people and businesses go bankrupt. You let their assets be purchased, be taken by the creditors. You let their assets be purchased, and you let them start again, and that cleans out, and then that pain creates a different culture, a different person who's much more attuned to the dangers of over-leverage.

There are a lot of people who've gone bankrupt that vowed, "This ain't gonna happen again, "and from now on I'm gonna be conservative." And then you have a conservative culture. There are cultures that are very fiscally conservative. The US American culture is not that, but there are cultures that are very fiscally conservative.

When you have a fiscally conservative culture, just take as an example, most American households spend more than they make. Seems that way. Let's say that you have a culture where people spend traditionally half of what they make. Well, this creates a radically different culture when you have times of economic hardship, where people have a 20% cut in their income, they can absorb it.

They have a 30% cut in their income, they can absorb it. This is what is necessary, is you have to have a culture like that to have a culture that is sustainable. And you can see this in nature itself. Let's say that you, I hope I've got to finish the show.

Let's just look at nature. Okay, what is the major problem with most modern monocrop farming? What happens is you have no fundamental biological diversity, and thus you have no real biological resiliency. You have one crop that you grow. And so if you have one pest that successfully attacks that crop, your crop is wiped out.

You have one crop that you grow, and if a flood comes in, your crop is wiped out and your year is ruined. You don't have a diverse anti-fragile farm when you have a monocrop farm. Now, if you go, and the best example I would say, if you go and look at someone, I don't know, a permaculture designer like Ben Falk in the United States, or you go and you look at, my favorite was Jeff Lawton did a review of a tour of his property during the bushfires recently in Australia.

If you think like a permaculture designer and you design a system that acknowledges that many things can go wrong, and you design a system that has a polycrop system, you have a diversity of crops, you have a diversity of animals, you even plan for a diversity of climate zones, right?

You don't know if the climate's gonna get warmer or if the climate's gonna get cooler. So you plant the most of your crops for your current climate zone, but then you plant some crops that will flourish if your climate gets hotter, and you plant some crops that will flourish if your climate gets cooler.

You plan water management, you plan the ability to flood your property, you plan ahead for fire. Now, we do this in some ways in modern systems. So why do you have fire sprinklers required by code in most modern buildings? Because people know that works. Why do you have so much redundancy and you have smoke detectors and you have modern electrical codes and in South Florida, you have these crazy building codes?

Well, it's because people know hurricanes come, fires come, wires short, and so you need all of these stopgaps, you need ground fault interrupt boxes in the wall, you need circuit breakers, and these are incredible technologies. But now when you come to finances, where is that? What is it? It's the stuff that we talk about on the show all the time.

It gives you circuit breakers, it gives you options, but that's not popularly accepted. That's not culturally prominent. It could be. There's no reason why you can't have a culture that thrives on that. But you have the mess of the ridiculously fragile modern system in the United States. You have such a mess that, it means that you have to consider some very severe scenarios when you start to face a significant event like a virus.

Everyone's invested in stocks, 100%. In closing, I would say this. There are very choppy waters ahead. Economically, fiscally, and monetarily. Choppy waters don't necessarily mean capsizing. Choppy waters don't necessarily mean that everyone goes under. It's possible that the solutions will work. I'm hoping for a best case scenario. Best case scenario is already pretty tough.

So I'm trying to give you the things to look for so that you can kind of see what's gonna happen. I don't know what this means in your personal finances, but if you have the ability, you see choppy waters ahead, consider rowing over to the shore, parking your boat, kind of getting out and pursuing it on foot, taking a look, just sitting and waiting.

Times of economic crisis are times of opportunity. In the middle of an economic crisis, you'll have the opportunity to make wise investments. You have the opportunity to make a lot of money. To make wise investments. You have the opportunity to start new businesses. You'll have the opportunity to do those things, but you need to be prepared to do them.

If there's something that you know you should have done to prepare that you haven't done, do it. Pull the boat over to the side of the river, tie off on the tree, and just wait. Take a look and see. I don't know what that is for you, but take a look and see.

There are going to be opportunities through this. You can use this crisis for your benefit. Even if the only benefit that comes out of it is you realized how exposed you are as an individual or how exposed you are as a family, and in the future, you're more conservative, more thoughtful, and make a plan to be less exposed, that's good.

I hope that from now on, there are people who look around and say, "I'm never gonna have less than a month's supply of toilet paper in my house." Because if you can have that be the cultural norm, if 80% of the people always have a month's supply of toilet paper in their house, then there won't be a toilet paper crisis in the future, because those 20% can go out and get toilet paper all of a sudden 'cause they're scared, and the 80% just sit back and rest.

And the system, the supply chain, can then keep up. Same thing financially, same thing at every level. As you create an anti-fragile system, you create a system that has resiliency. I could give example after example after example of resiliency. We could do it biologically, we could do it ecologically, we could do it financially, we could do it in every area, but I'm done.

Just think about it. What does it take to create resiliency? At the very least, look around and say, "What do I need?" What I'm doing is I'm making lists and saying, "All right, I thought I was pretty well-prepared. This has proceeded. I always thought this was a worst-case scenario, and it's proceeding according to that.

What do I really wish I'd done?" Simple example. "All right, I wish I had some gas masks. I've always thought, 'Meh, come on, gas masks.' A little bit of an overreaction. I've never even seen a gas mask other than in a movie. And so, too much." But at this point in time, if I were going to the supermarket, I'd be happy to wear a gas mask.

I've got some respirators, I've got some masks and things like that, but a gas mask is basically perfect protection. And you know what? You could buy gas masks for, you know, masks and some extra filters, a few hundred bucks. I always thought the people who stocked gas masks, "Eh, a little bit extra, a little crazy, a little bit too extreme.

Wish I had some gas masks." So what is that for you? At the very least, learn the lessons, and let's hope that, right, let's hope this all works. Let's hope we find some solutions, hope we beat back the virus, hope we just have some, you know, tens of thousands of people dead and not millions.

Hope that economically it's a short term. But meanwhile, look ahead and think about what you would do at each stage. What are your triggers? What do you see? There are some serious problems. If those problems are limited to simply more debt at the federal level, and some bailouts and some things that get monetized, some assets get purchased by the Federal Reserve, and those problems are simply that people have some money and have some short term hard times, get through a few months, man, am I gonna be thankful?

But even in that, I wanna emphasize that's going to create more structural problems for the future, and at some point, those bills have to get paid in some way, usually through bankruptcy of some kind. This is a time where people will really shine. I'm so encouraged to see, I loved that story that came out of Italy where they ran out of valves for ventilator machines or something like that, and somebody brought a 3D printer and started printing valves for them.

I'm thrilled by what you see. Times that are hard can bring out incredible, just goodness and solidarity and love from people. And so I'm thrilled to see that. It can also be very, very difficult. I'll give you an example. One of the areas where I've been beefing up my own preparations is just in home security right now.

Home security is very concerning, and security risks always increase in a financial crisis, and right now, you have all over the country, you have police departments saying that they're not going to be able to respond to unsignificant or less significant crimes, and so there's a percentage of the population that is going to be stimulated in this to go out and do more.

Here is from the city of Philadelphia. The city of Philadelphia has updated its posture concerning the COVID-19 pandemic. Public release, beginning today, March 17, 2020. That was yesterday. The city is suspending all public-facing services. To that end, most municipal buildings will be closed to the public as the city tries to limit the potential for exposure to COVID-19 patrol districts.

Not going on here. Listen to this. Effective Tuesday, March 17, 2020, at the start of the 4 p.m. to 12 a.m. tour, arrests for the following offenses will be effectuated via arrest warrant. All narcotics offenses, theft from persons, retail theft, theft from auto, burglary, vandalism, all bench warrants, stolen auto, economic crimes, bad checks, fraud, prostitution.

Officers who encounter persons who would ordinarily be arrested for these offenses and processed at a detective division immediately following arrest will adhere to the following procedures. Temporarily detain the offender for the length of time required to confirm identity. This may require the deployment of mobile fingerprint scanners. Prepare all relevant paperwork.

Release the offender. Submit all paperwork to the detective division of occurrence. So you see this in Philadelphia. You see this in New York City changes. You see this in Portland, Oregon. You see this in Lansing, Michigan. You're gonna see this all over the place. So one of the things, if you're proactive and forward-thinking, you need to be significantly considering your security plans.

There may be a run on toilet paper, but there's probably still plenty of surveillance cameras available. There's probably still plenty of motion detector lights available that you can order and you can set up to improve your security plans. Don't sit back and wait for that to be the next run.

Prepare accordingly. Thank you all for listening. I gotta go. Few things to close as I announce in closing. Number one is I'm still doing consulting work. If you would like to do consultations on personal financial movements, I'm running a March Madness sale. Discounted my normal rate from $400 to $250 an hour.

If you book with code March Madness, March Madness have canceled, but my sale was not. If you were interested in that, email me, joshua@radicalpersonalfinance.com, and I'll give you details on my private consulting services. Joshua@radicalpersonalfinance.com. Number two is I still am running, I have a number of courses available. You can find probably the most useful course at radicalpreparedness.com.

That's one of the cheapest courses. I started that back in January when I was concerned, especially about the virus. And I said, I gotta get a basic family preparedness course going. 29 bucks at radicalpreparedness.com. You can still join there. The classes are archived. And then we still have more live classes coming out.

So join me there at radicalpreparedness.com. And then go to radicalpersonalfinance.com/store. And if you have not taken my economic crisis course, you should do that. Because the strategies that I have talked about in that are absolutely strong, and they seem more important than ever. And there's still time to prepare.

There's still time to prepare. Not for being quarantined in your house for two weeks. That's done. But there's still time to prepare financially because all these things take time to work out. So go and check out my how to survive and thrive during the coming economic crisis course. The strategies in that course are sound, and they are things that I am doing to prepare.

I've done them, and I'm doing them. I'm gonna be posting a special live Q&A for the students of that course soon. We'll talk about some of those monetary strategies, especially in light of the current events. So go to radicalpersonalfinance.com/store and sign up there. In fact, you know what? I'm gonna host a sale on that.

And so the coupon code is going to be coronavirus. I will give a 20% discount on all of my courses through the end of March using coupon code coronavirus. All one word, coronavirus, as a coupon code. 20% off all my courses available at radicalpersonalfinance.com/store using coupon code coronavirus. Thank you for listening.

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