This is that the fact that he can say both are happening at the same time or could happen the same time you have to ask yourself whats the whats the use of even using words like inflation or deflation because a stock doesnt describe the whats going on with the economy weve outgrown those words the economy has moved beyond those definitions were in a different type of economy and market completely you know ive called it things like buy flay ssion weve talked about that last year where you have both inflation and deflation we talked about having financial wind shear or the forces of inflation and deflation are butting up against each other and then the the average person is kind of caught middle like you would be caught a storm a boat in this kind of storm and its being ripped apart and youre spinning we called it a Bermuda Triangle of finance where youre flying over the economy and all the gauges are going in opposite directions and theres that inflation is that deflation the my upside down we call it the poseidon adventure of the economy where. Steve mcqueen is and his band the people escaping the ship are going in the wrong direction because they dont realize the upside down weve been this is been a common thing so stam a drug of millers that stating what weve been saying now for a number of years that it looks like both but it cant be both it has to be Something Different and what it is as weve been saying is that its neo feudalism its the fed is printing all this money as he points up but its not inflating the economy because its being used to take the Economy Private in a huge leveraged buyout like if Michael Milken were running the world this is what he would do its neo feudalism stanley thats thats what i call it by what it really is yeah and its that command and control in order to maintain that status quo of the neo feudalism whatever you want to call it the interference in the markets which are reflecting just merely nature and including in it time and energy and those are the 2 most important ingredients to measuring you know our economy and time went negative with negative Interest Rates Energy Prices went negative in the past year so it makes sense that you would have that swirling compass telling you are you up or down you dont know anymore because at a certain point you lose track and you could kind of see this in this next chart actually Jeffrey Gundlach says this could be the charts of the year and what you see is this crisis increased disposable income the bottom line there is disposable income. Excluding government transfers so Social Security welfare Unemployment Benefits anything like that including you see it is a huge surge going back decades this is like a huge surge in u. S. Income and totally because of u. S. Government transfers so this is the thing that stanley truckin miller says is going to cause the inflation but its also extraordinary that youre seeing you know we have gone through the Looking Glass that started in 2008 that weve really had that a lot of the income. Of the ordinary american 18. 8 percent in 2008 came from the government and thats when baby boomers turn 62. 00 now you have that plus the pen demick plus all this collapse plus the financial collapse plus the negative Interest Rates and negative Energy Prices and we have 24 percent of income in america is from the government so were reaching at some sort of Tipping Point you know the Event Horizon is being passed that disposable income is being flooded into the system thats the money printing. And so on the lack saying that while druckenmiller saying there is an inflation risk or is causing prices to go up. Simultaneously though you are living on a ship that is sinking due to the implosion of the velocity of money and therefore the collapse of the bond market and we know that the bond market has collapsed because the only way that america can sell sovereign bonds or government is to buy them back from itself if america wasnt buying back its own debt then know there would be no bid there would be nobody buying the debt and like in 1971 the American Government would have to declare bankruptcy or insolvency which is what nixon did when he caused the gold window so net net you have. An economy that would be similar to what you might find at a funeral home its a cadaver thats being drained of all his life fluids but people are mistaken the formaldehyde of money as a reanimation of the corpse and that we should then put this corpse up on its own 2 feet and ask it to walk out. Out of the funeral parlor which is asking too much of a corpse this American Economy dive in 2008 theres been a lot of formaldehyde pumped in through the system but its still dead its as dead today as it wasnt 2008 and these professional Money Managers obviously by their statements are utterly lost in the woods i have no idea what theyre saying i have no idea what they should be doing well part of the situation we find ourselves in of the topsyturvy them and where we cant tell up from down is that we do have a bifurcated economy where of neil feudalism right and because we have the u. S. Dollar and we can print it we dont need the bottom 99 percent so the top one percent in which Stanley Druckenmiller lives they get the fed money thats the credit that is printed remember its credit is not money only the u. S. Treasury can create money they can issue bonds and they can print currency so the ordinary 99. 9 percent of americans live and that their economy where they have to rely on the treasury you know to and the government for tax policy business policy fiscal policy all of that stuff that would create in a real economy and obviously you know sense since nixon but especially under bill clinton we shift all of our economy to china right and and the top 1 point one percent have been able to live off all this credit so they get free credit for which they can buy up all the assets of the world and have an income stream based on that based on the real goods and services produced by the rest of the world and you know part of the military Industrial Complex and the intellectual property complex they get to get that stream based on all the credit created whereas the real ordinary person lives and that that all their economy and youre seeing like you know that huge rise in income. Is now hitting them because of this corona virus and that thats also going to cause turmoil we dont know how its going to play out but it could play out in this election because people have savings for the 1st time go online read it you could see people talking about having savings for the 1st time in their lives because of all this stimulus money thats being sent to them the enhanced Unemployment Benefits so you know there is something going on something snapping we wont know until it actually happens and we can look back and hindsight but its Something Interesting or thats an interesting point to make this possible income is going up but it doesnt mean that income is being disposed of he has that if people are saving it theyre not actually spending it would have main thats why the money velocity is down also is because yet disposable income if you are described as disposable income is up but people are saving it theyre not disposing of it so you dont see people people dont believe that the condom is coming back so theyre saving now this is also called the paradox of thrift and its of reviled by the keynesians and the money and the debtors out there who believe that you need to spend spend spend or the economy collapses but you know that is only true if you have a sound Monetary Policy and we dont if Interest Rates are 0 as you point out then the Michael Milken thickish of the economy is in full swing that is taking it private the mergers and acquisitions will continue until the meetings stop or that the beatings the mergers and acquisitions will continue until morale improves animal spirits improve right until animal spirits come back and if they never come back and we find ourselves with oh my god only 5 people own mind the 9. 8 percent of the economy how did that happen well you know if you watch the show for the last 10 years you would know how it happened yeah and fact when he said that people are saving americans are saving all this cash in this huge savings rate its like chinese level savings race and why did the chinese save some. Well because there is no sort of they have a really nice feudal system where this a concentration of wealth is vast so they want to save it in order to be antifragile of course because Health Care Costs things like that might wipe out their familys wealth so they have to save a lot because of the precarious precariousness of the whole situation so of course like your experience over the last few decades where you havent had savings for for decades because you have to work or work and work 2 or 3 jobs member as george bush has said like uniquely American Well of course like you want to youre still you have posttraumatic stress disorder from that from these stressful years and you finally could say ok here it is ive got some savings right the depression generation were great savers yes yes my mom would you know say for pennies on her nickels and put them in depend wrappers and take them to the bank and get cash around every few months right now is something she learned as a child of the depression these young millennial generation z. Or china are children of. You know the debt apocalypse you might call it this is what Stan Druckenmiller had talked about in terms of the deflation hes expecting hes expecting and asset prices of the fed controlled economy not the treasury you know control the economy the people that have to live within the treasury and so on their checks the treasury for their taxes and stuff like that or received income from the treasury so this is these are 2 different economies and theyre about to collide this could be like a neutron star colliding very soon they want appen to new tron stars explode it gives us gold yes were going back to gold were going to take a break after this star explosion and a meteor or hits and when we come back we wont be here at all itll be complete obliteration dont go away. Well look forward to talking to you all. That technology should work for people. Must obey the orders given by human beings except were such orders that conflict with the 1st law show your identification we should be very careful about Artificial Intelligence and the point also use the great transfer. Really serious thing with Artificial Intelligence where some of the d. N. A. Or robot must protect its own existence is. A new gold rush is underway and. Thousands of illiquid. Workers are flocking to the gold fields hoping to strike it rich is a good way out of those they owe by the children are torn between gold. My family was very poor i thought i was doing my best to get back to school which side will have the strongest appeal. Seems wrong all. Just all. Get to shape out just because to educate and in gain trade equals betrayal. When so many find themselves worlds apart. Just to look for common ground. Welcome back to the kaiser report im max keyser time now to go to the to the oracle of secaucus the scene here of bayonne they want to only michael pentel of pent up port dot com michael welcome back its good to be with you tremendous to see you. All is a good time with michael pent all right lets you know usually we talk kind of macro stuff and i wanted to dig into some whats happening in your industry folks that are doing what you do and trying to make money in these markets a start with Warren Buffett you know hes dumped all of his Airline Stock recently most of his bank shares he went long barrick gold thats quite an interesting move there and japanese conglomerates shorting america the thing that he said he would never do michel this is a traditional emblematic person who says you know just buy and hold america and now hes buying gold so i guess you can teach an old dog new tricks he no longer believes in this sanctity and the purchasing power of the u. S. Dollar so he selling dollars by interest metals i love the movie i think is very wise and hes welcome aboard my team has to be nimble thats one thing you need to be in this industry is them ball you know you dont make money by sticking on to a sinking ship now a stamp druckenmiller another famous money manager worked at the george soros for a long time more of the best in the business he he made entering statement he thinks that inflation could easily hit between 5 and 10 percent because according to him weve got this defacto m. M. T. Or modern monetary theory going on at the same time he thinks you could see deflation in terms of asset bubble bursts right so this is like 2 conflicting forces in the economy. All at one time it sounds i guess vaguely like stagflation vote what do you make of that michael i mean i like mr druckenmiller been easier is a little bit conflicted there there are 2 different Investment Strategies i have a 20 point model over the inflation deflation and the Economic Cycle model and makes a heck of a big difference if you want to be hedged against stagflation or inflation or hyperinflation where if you want to protect against just inflation and deflation so he better make up his his mind. Classing it collapsing hasnt prices would be very deflationary and you need totally different strategy then for one thats you know as i said a 2nd derivative increase in inflation i am heads right now towards just inflation and deflation and recession. I was hedged for stagflation from march to say august and ive changed wait until late august i change the earlier strategy because we have a massive fiscal and monetary cliff that were going over and for those that believe like mr powell that you could just say i believe that we should bail have a chilling to hear Percent Inflation target instead of a jew percent target that we just cant reach as we measure it based on a coup or you see deflate. You know doesnt mean you can reach it but as they say we had a 3. 3 trillion dollar deficit in fiscal 2020 that was borrowed money that was printed by the Federal Reserve and now this Balance Sheet that went from. 800000000000 in 2007 to 7 trillion in 2020. It increased by 3 trillion dollars in a matter of a few months the Balance Sheet max is now shrinking if you look at the past the Balance Sheet has shrunk by our 100000000000. 00 thats a big difference that increasing at the rate of about 500000000000. 00 a month thats a huge trenchant gap in the exhilaration of the Monetary Base and when you say that the fact that theres no more elegantly money no more 1000. 00 checks going out of mr bernanke helicopter as theyre often the 1st time in this country universal basically this is what caused the stack felician in the middle of this year but now again like i said there mr druckenmiller just inflation deflation and recession intil the monkeys in d. C. Decide to have the courage to borrow trillions of dollars more bankrupt the nation even further and have the courage mr powell to print it all you know this modern monetary theory or universal basic and then this idea it sounds like mer and this election coming up and it sounds like its an election about whether america wants to be a socialist or not is that a fair characterization whats fiscal and Monetary Policy has ever been in place that has ever been any country not only i see any country in the world that has been able to be successful and remove i mean just deserve a policy for decades and theyre still there and you read your is at 0 Interest Rate policies and in to me we got off our observer policy for maybe a man and a nanosecond and then were already panicking and cutting rates in 2100 muster for anyone ever heard of a virus they cut rates 3 times in 2100 remember that and we were backed into q. E. When the report harkat. So then we started we jumped the shark the engine. Into the threshold in the new era of u. B. Aai and modern monetary theory where we just say you know what you say in a moment well send you a check to do anything and if the democrats get in. Trouble harrison is on the democratic ticket as the Vice President as a spouse own 120000. 00 per annum. Judy every family there are virtually every family thats not or a quote rich ok so yes thats how you get that is how mr howell is going to finally achieve is core p. C. If you were to have presented place in for many many years or at least as many years as it was below 2 percent and that is that youre the holy union between fiscal and Monetary Policy where you get money not just sent to wall street so they can gamble away you know so the robber traders can also join in and you send money to j. P. Morgan and you send money to rome to traders through their 1000. 00 checks that arrive in the mail and thats how you get labor stagflation and thats probably where were headed if thats where v. C. Wants to be across the world and china may have got some tensions rising. Looks like theyre going to reduce some of their u. S. Bond holdings does it doesnt matter that china starts dumping bonds more u. S. Bonds more aggressively i mean cant the fed just print more money and buy them why is that a big event there michael well i think its a big event for the u. S. Dollars has your money and its worlds reserve currency status by more than 7. 00 u. S. Dollars you dont lose that status i dont think is going to crash against the renminbi or the yen or the euro but he could lose a lot of its purchasing power even against other floyds the i currencies well i think china has made decisions that i mean couldnt down from just rain 80 and default on back were going to treasuries thats owed to china thats a big risk for china also the chinese are not really getting a huge Interest Rate on a 10 year note you know the 10 year treasury is yielding 0. 6 percent. And it could be a very to 0 like the rest of the developed world maybe sure this is gee why am i going to invest my trade surplus in a bond that pays me nothing in the principal can be defaulted on. I decree from the president so maybe ill do the smart thing and put my turns the surplus in things that really mean something wait Precious Metals i got to ask you this question youre a keen observer of markets and Global Finance this story about tech stock is fascinating so chinese has a Company Called ticktock social Media Company and dot com mandates as emperor of the world that the china must sell america ticktock where this come from is this unprecedented in your lifetime or whats going on here michael well i mean im certainly not an expert in tech talk but i can say this we have a president who again im a political gentle for the man but he seems to be not only him but him and the Federal Reserve seems to be stretching the boundaries and limitations of what government is supposed to do so youre not supposed to Tell Companies a few will oversee his youre going to pay huge tax if you develop your products overseas a very important back here in the United States you use tax that doesnt really sound like capitalism to me although you know hes trying to fix the trade deficit by the way we did the biggest trade deficit this country United States has the biggest trade deficit is ever had in the last 12 years. In the last most traders it was largest remember that so. For all the bluster about trying to balance our trade deficit with reza wrote it just hasnt not work but you know you want to say china spies on us like not a big admirer d of the government of china maybe they do im sure sure thats the case and turn and trump by decree can say guess what youre selling that company or your band from this new age so nothing surprises me anymore by the way just in time the internet will bow i think if they did the Federal Reserve was not allowed to buy junk bonds i should think that would be ridiculous but guess what jury in your emergency we have to learn with a jury room and emergency our government and our stead change you. Forget about the constitution yeah im innocent or just driving at theyre driving a semi tractor through every legal barrier on the books that i mean ive seen the wall street for 40 years and ignore the law but this is getting pretty absurd so lets mean youre got a hot hand over there pent up port dot com again this year looks like were going to have another big year over there and you know youve got your 20 point model to guide you through these turbulent markets and you you know if you make a mistake it shows up the next day so youve got to be on your toes away like talking to you. Lets talk Portfolio Management 1st i can barack call down the gold miners in general they seem awfully cheap compared to the price of gold michael are they dirt cheap or am i crazy well you might be crazy and they could be deferred cheap because you know theyre not mutually exclusive. But yes i think youre going to like gold silver more folio consists of 3 things right now utilities Precious Metals and assurance those are 3 things that might work for you and that is the case that has been the case for the last 2 weeks about about the last 2 weeks. Because this is were going over this message just live and i still hear people talking about the dont you know the state has your back well the thing is youre back with 0 this race but look at the 2nd derivative change in the Monetary Base and well show her theres plenty of fiscal so were from the economy no there isnt all those drama to traders that used theres a 1000. 00 checks. But i. Guess one big bird and theres no further checks coming so wall street has a huge fiscal and monetary cliff a reality check not to mention the election chaos coming november 3rd eye is exciting im going to carry this hour to a 2nd segment thats ok with you thanks for being on kaiser report michael wonderful all right when im going to do it for this edition of the kaiser report with me mikes kaiser and i want to thank our guest pressure michael pentode pent up for dot com and stay tuned for a lot more coming your way my all. Is youll be a reflection of reality. In a world transformed. What will make you feel safe. Isolation community. Are you going the right way or are you being. What is true what is right. In the world corrupted you need to this and. So join us in the depths. Of the shallowest. With a post. From the. Last time we chased. Each one of them carrying 20 kilos d of drugs. That they just stepped right. Into the very well i mean. They have. It with. I dont know maybe theyll get a. Break right. Now what. Will justice be done in a london court not only on trial. Speech and professional journalism what explains this farce Media Coverage of trial why havent more journalists. In is the sun is being used as far as you need same with those channels. To beat. The world is driven by shaped by those. No jerry thinks. We fear him to ask. Russia condemns germanys unwillingness to share evidence relating to the alleged poisoning. Of files off a 2nd official request for the test they. Were asking the german side to confirm everything it claims were facts because as we have repeatedly seen unfortunately many of the supposed facts that are sensational you know and so i did would have any factual verification. The New York Times meanwhile sizing on the source claims in the valley wants to return to russia. In other headlines british formula one star Lewis Hamilton could face punishment for a t. Shirt highlighting the Police Brutality of fall and filed a formal rules look at what the sport and politics can ever stay
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