With an insurmountable national debt and a disastrous worldwide economy, could the United States still come out top dog? Join Jason Hartman and returning guest, Daniel Ameduri, inflation expert and Chief Strategist of FutureMoneyTrends.com, as they examine the possibilities and talk about Daniel’s predictions for the new year.
Daniel explains the difference between price inflation, which, though we have inflation, we aren’t seeing it in everything yet, and hyperinflation, which is a total loss of faith in currency. He talks about how if we have deflationary shock, it won’t matter what the Federal Reserve does. People around the world will lose faith in America and the dollar will become worthless, and feels there will be some type of quantitative easing. Daniel notes that, in his opinion, the $20 trillion mark in our national debt will be the psychological level at which people stop buying our debt. Jason and Daniel also talk about resource wars as resources are becoming scarce. According to real data, oil has peaked, silver has peaked, as well as many other natural resources.
Jason and Daniel also discuss this possibly being the year of Ron Paul, whether he wins in the Presidential primaries or not, simply based on his foreign policy solutions. One thing Daniel notes is that our government redistributes our taxed incomes all over the world. Americans get caught up in the debate over a tax base, but Daniel says, “Hey, you’re fighting over your own money!” But Daniel is also optimistic in saying that the U.S. still has an advantage over the rest of the world due to our business base, large military, and the largest store of gold. We’re still going to go through hard times, but it’s still possible the U.S. can come out on top. The dollar is losing its value as other countries trade in their own currencies. Daniel expresses that a complete currency crisis now is to the U.S.’s advantage. The U.S. needs to do a currency reset and back the dollar with gold again. He also feels gold will be higher due to quantitative easing, the Euro crisis, and Iran.
Daniel Ameduri is a free-market thinker and inflation expert. His market calls are firmly rooted in free-market economics theory – the theory master economist Dr. Ludwig von Mises brought the world decades ago. Like von Mises, Daniel understands that government’s monopoly over money and banking is utterly misguided and is distorting credit markets. Its intervention is disastrous and dangerous as it churns out more dollars and generates unsustainable booms and busts. Daniel carries on von Mises’ legacy, bringing investors eye-opening, no-holds-barred analysis, market calls that are dead-to-rights, and strategies for investing that protect personal wealth during turbulent times. Daniel has been featured on RT TV, Power Hour, Financial Sense and on over 100 radio shows.
He is currently the editor of FutureMoneyTrends.com and was formerly with NIA. Appearing on MSNBC, CNBC and KTLA News, inflation expert Daniel Ameduri calls it like he sees it… and he sees it pretty clearly. Daniel was one of the first to call the market crash of 2008… and the collapse of both Lehman Brothers and Washington Mutual. Daniel went on to start Future Money Trends in 2010… and it has quickly become one of the top websites for the gold and silver markets. In addition to providing cutting edge research about macro-economic trends, Daniel regularly profiles micro-cap companies with explosive upside… rare gems with the potential to make investors rich.
ANNOUNCER: Welcome to Creating Wealth with Jason Hartman! During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before, and a new slant on investing: fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self-made multi-millionaire who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it! And now, here’s your host, Jason Hartman, with the complete solution for real estate investors.
JASON HARTMAN: Welcome to the Creating Wealth Show by yours truly, Jason Hartman, your host! Thank you for joining us today for episode #238. Boy, we have been recording so many great shows for you. We have got just amazing stuff coming up. You’re gonna love it. Amity Shlaes, I think she’ll be our next show; she’s the author of The Forgotten Man and The Greedy Hand. Very famous bestselling books. And she’s really interesting, and I think you’ll like those shows. We’ve got Joel from Property Tracker coming back on; he’s got some great freebies for you. Some total giveaways, no strings attached. And we’ve got some client interviews coming up, just to share their real world experience with their investments, and some best practices in property management, some best practices in acquisitions, and vetting properties, and so on and so forth.
So, I can’t even remember what else, we’ve been recording so much lately. So, it’s just gonna be a fantastic year of education and investment, and I tell you, in 2012, these opportunities are phenomenal. Do I sound like a salesperson there? I hope not, because I’m very sincere about it. Just amazing opportunities out there right now. And that’s why we’re so busy. People have been clamoring down our doors to invest in properties, and just finding so many good, good opportunities out there that I think you’ll be really, really amazed.
So, you know how we talked recently about institutional properties, and how institutional investors are so willing to take lower returns on their investments? And we talked about the reasons for that; when it’s everybody’s money, it’s nobody’s money. That’s one of the reasons. Needing to just simply deploy money, that’s another reason. These institutional investors, many times they have too much money coming at them, and they’ve got to deploy it. It’s like that old government thing. If you don’t spend all the money your program is given—if you don’t spend your grant, if you don’t spend your allotment—well, you get less the following year. So, institutional investors just, very frankly, take some really rather lame deals, if you ask me.
And here is an example of one. The Stan Johnson Company, a commercial real estate brokerage—I’m on their email list, and they send me a net lease offering. And this is for a Bank of America. Yes. One of the most hated companies in America. B of A sublease. Or I should say, a B of A absolute net ground lease. So, this is a triple net lease, where you can own the property—you can be the landlord for a Bank of America branch. And you can pay over $4.6 million for this single tenant property. Now, I don’t know about you, but B of A is having a lot of problems. I’m not sure you want to be their landlord right now. But even if you did—who knows if they’ll close branches, or what they’ll do—but even if you did, and even if that company had a great future, which I don’t think it does—but even if it did. You would own this ground lease. You would make a cap rate—a capitalization rate—of only—and this is terrible, folks. This is a terrible cap rate—of 6.56%.
This is junk! Why would you even take that deal? That deal stinks to high heaven! And that’s assuming they pay. And that’s assuming they are a performing tenant. 6.65% on a $4.7 million deal, basically. So again, our deals are much better than that. If you see a cap rate on the www.jasonhartman.com website below 9%, I would be astonished. You’ll see lots of them higher than that. So, again, just a lousy deal. These institutional investors. We do much better as scruffy investors that are looking for smaller deals that make a lot more sense, that we have control over. Just far better investments, okay?
So, today we’re going to talk about some predictions for 2012. We’ve got Daniel on the show; he’s been on before. He’s with www.futuremoneytrends.com. So I think you’ll like what he has to say. And some great stuff coming up in the year to come! But before we get to that interview with Daniel, let’s talk a little bit about some things going on out there. A recent article, this is entitled New Cars Getting Big Changes To Lure Younger Buyers. Now, why do I even bring this up? We’re talking about investing in real estate, we’re talking about private money lending, we’re talking about all of these great things. Why would we care about what’s going on in the new car market? And what they’re doing, these car manufacturers, to lure younger buyers? Well, we care a lot about that. Because they see this as a huge market. Remember, Gen Y consists of 80 million Americans, the largest demographic cohort in history.
So, this article talks about all the changes that they’re doing to attract this very lucrative block of prospective customers—ages under 30. And as real estate investors, we’ve got to think the same way, because those people are renters. They will be moving into the ownership market eventually, but again, I don’t think there’s any urgency on their part to do so. So, you see a lot of businesses catering to this demographic cohort, because it is such a large group. 80 million people. Larger than the Baby Boomers by 4 million; a huge marketplace here that we have got to think about.
And Trulia, the real estate website Trulia, that releases predictions and so forth—one of their predictions, their crystal ball, as they call it, for 2012—I found one of these things interesting. Item #2 on their prediction list here was, rents will rise, which is a bad thing. Hm. I don’t think it’s a bad thing, but apparently they think it’s a bad thing. I think it’s a great thing, as an investor. And it goes on to say, with fewer people buying homes, and more people losing their homes to foreclosure, the rental market is only going to get tighter. Now, that’s good—they’re portraying it as though it was a bad thing. It’s good for us as investors. The rental market is only going to get tighter, especially in older, dense cities. And it talks about Washington, D.C., New York, San Francisco, and you know, that’s true. But the thing they don’t mention there is the rent-to-value ratio, which totally stinks.
So it reminds me of that article a few years ago I saw, about how Oklahoma City, the media says, because they’re stupid and they don’t understand the details, and they don’t drill down, and they don’t understand simple things like rent-to-value or RV ratio—they’re saying, this article I saw a couple years ago—it was saying that you wouldn’t want to be a landlord in Oklahoma City, but you would want to be a landlord in Los Angeles. Well, what is the obvious thing they didn’t consider? The value, or the purchase price, of the property. The rent-to-value ratio. So, the casual observer reading that article I saw a few years back would say, well, I better run out and invest in Los Angeles, but not Oklahoma City. When the truth was, the huge difference is, you would have been so much better in Oklahoma City, where you could buy a house for $80,000 and rent it for about 1% of the price. Whereas in Los Angeles, at the time, you would have to buy a house for 4 or $500,000, and rent it for about 0.3% of the price. But again, the idiots, just reading that article, just skimming the surface—they don’t get it.
So again, the Trulia point here, misleading, saying that rents are only going to get tighter in New York, Washington, D.C., and San Francisco. But folks, we all, as prudent investors that get it, we all know those ratios are totally out of sync. Yes, those rents may rise. Sure. But they still are so far out of sync with prices, that those cities just don’t make sense for investors. And what do all three of those cities—Washington, D.C., New York, and San Francisco have in common? They are extremely landlord-unfriendly. They are very liberal, they think that the landlords are evil people, and the tenants have all the rights in cities like that. New York and San Francisco have huge swaths of rent-controlled areas. I don’t think Washington, D.C. ever had rent control. I cannot be sure on that. But I know from evidence that I’ve heard from many investors over the years, of course, all three of those areas—very landlord-unfriendly. If you ever have an eviction, you’re gonna have problems. Those are where tenants have all the rights, and landlords just don’t have any rights, it seems like. Okay?
So, the article goes on to say, high rents will hold back economic growth if businesses can’t pay workers enough to have a roof over their heads. Well, that’s true, that’s a good point. Squeezed city dwellers won’t get relief until late 2012, when a wave of new multi-unit construction projects that started late this year will be completed and available for rent. And folks, let me tell you something. Yes, there is construction in the large institutional landlord arena, because they see how great the rental market looks for the coming decade. I mean, it’s just phenomenal, the demographics coming at the rental market right now. Great for investors. But the amount of construction is miniscule. It’s negligent in comparison to the demand.
Again, this is really just showing how phenomenal the opportunity is for us as investors in the coming decade. And really, in the coming several decades. Because when you combine the lack of construction, the increasing population, the bad credit worthiness of so many millions of people now—and many by choice, through strategic default! Many by choice are deciding that their credit is only worth a certain amount of money, and those people will make great renters for us for many years to come. And you combine that with the entitlement time bomb, inflation, all the stuff we’ve been talking about on all the previous 230 episodes of this show, and my other shows, the Holistic Survival Show, the Jetsetter Show, the American Monetary Association’s podcast, the Young Wealth Show—all of my other shows. The Heroic Investing Show. Etcetera, etcetera, etcetera. 15 other shows that I do, with over 400 episodes in total—you know that the opportunity coming at us as investors, nothing short of phenomenal.
And a couple more things here. Of course, join us for our Meet the Masters event. It’s going to be at the Hyatt Regency Irvine. And by the way, we did settle on the date. It is firm. It’s March 24th, that’s Saturday, and March 25th, on Sunday, and again, a lot of people coming in Friday evening, so we can have a dinner together then. And that’ll be at the Hyatt Regency Irvine. Register www.jasonhartman.com. And by the way, if you want to pick up a couple of our fantastic products there, we’ve still got a little promotion going on. Actually it’s a pretty big promotion. For the Creating Wealth Home Study Course, promo code to get $200 off of that is CW200—that’s CW200, promo code—for $200 off the Creating Wealth Home Study Course. And, the Financial Freedom Report, our highly acclaimed newsletter that so many of you are subscribing to, and I hear such good things, and such good feedback from you. Thank you for that. Is $100 off, and the promo code there is FFR100, that’s FFR100. So, start the New Year right by taking advantage of the event and those products.
Last thing before we go to our guest today on show #238 here is, I had a really interesting little discussion about gold. And you know how I feel, if you’re a regular listener into the show, about gold and silver and the precious metals. I think they are okay. I don’t think they’re great. I think they are defensive, not offensive. I think they’re better than dollars, or better than whatever fiat money you use, in whatever country you happen to be listening to the show, in the 26 countries where people listen. So, I think they’re fine. I think they’re a defensive strategy to preserve wealth. But I do not think they are like income property, an offensive strategy to create wealth. And there’s a big difference there.
So, I had a little interesting exchange with one of my Facebook friend, and his name is Bob. I won’t give out his last name here. But it’s interesting. He posted an article, and he said, I totally agree—there was a graph, and the article said, gold is not a bubble; it’s going to $10,000. The best time to plant a tree is 20 years ago. The second best time is today. So, you know, again. I always love debating with these gold bugs, because it seems like they only have one level of understanding. Again, their premise is completely accurate. I couldn’t agree more with their premise. Uncertainty in the global economy, in the geopolitical environment, fiat money, spending, that we’ve created all this new, fake fiat money—it’s really fiat currency, I should call it, that’s the right name for it—out of thin air, the past several years. And look, folks. This game cannot be perpetuated forever. We all know that. We all get it. They keep kicking the can down the road. It’s amazing that the house of cards has lasted this long. Fine and dandy. But, again, defensive.
So here’s the exchange with Bob and myself. He says, gold going to $10,000, he totally agrees. So I say, in nominal dollars—maybe. Not in real dollars. Bob says, what real dollars??? Nothing but fiat currency…. And I say, constant dollars/real dollars = the same thing. And Bob says, gold is not expensive. The dollar has lost 98% of its value. So what real dollars are you referring to? You know, this is the typical thing I get. And I said, agreed. That’s my point. Has gold gone up, or has the dollar gone down? Bob says, dollar is down. I said, yup. So the question is, did people make money with gold, or just keep pace with inflation? And then I put a link to an article that is a blog post on my website at www.jasonhartman.com, the link is rather long, so you can just go to www.jasonhartman.com and search for the article. Because we do have a great little search engine on the website you can take advantage of, powered by Google. And you won’t get any ads or anything there either, because we actually pay for that little widget.
And so, the article’s entitled 7 Reasons Real Estate is a Better Investment Than Gold. And in the article, it talks about the 7 reasons. And it says, in order—#1 reason, is that there’s no financing. No leveraging to allow you to build wealth quickly, and outpace inflation. The metals—the silver, the gold—they don’t have that advantage. In contrast, income property has tax-deferment opportunities, and the tax advantaged through depreciation while owning income property are a non-cash or phantom deduction, nothing short of phenomenal. Again, metals have no tax advantages. In fact, they have huge tax penalties, because they are taxed at the collector rate! So when you sell them, you pay not the long term capital gains rate, but you pay 28% as a collectible.
#3, no rental income. You can’t rent out your gold bars or your gold coins. So, again, there’s no income generated from them. #4, your investment could be subject to confiscation. Now, the arguments are that collectible coins are immune from seizure or confiscation. But you know, I think this is flawed, because who knows that they won’t just change the law? They’ve done it before. They did it during the Depression. It could happen again. #5, precious metals are prone to manipulation by forces much more powerful than any of us. Central banks hate precious metals. They want you to denominate your wealth in their fiat currency game, okay? So, they’re constantly manipulating these precious metals. A lot of the silver bugs, they’re saying, well, JP Morgan is manipulating the silver market. Well, sure they are! Of course they are! And so, silver value is much higher than it’s stated to be. And what is it now, about $36 per ounce, right? But the point is, the question is, folks, how long can it be manipulated for? Well, the answer—forever! Who knows when the manipulation will end?
So, again, not a solid bet in my opinion. Again, a defensive strategy, it’s fine. But it’s not an offensive strategy, okay? So, manipulation, another big problem. #6: the myth of superior liquidity of precious metals. Well, most gold and silver investors, and platinum and palladium investors, by the way—they don’t sell their metals. Well, as an experiment, I inquired about selling my metals. You know, I invest in this stuff a little bit. I inquired about selling them myself. And I found that you have to send them to a place where supposedly they will count correctly, and count the number of coins you send them, and so forth, and they supposedly do it with cameras and stuff. Well, say you get past all of that. They charge you a premium for buying it, a premium for selling it, and you have that lack of security where you need to let it out of your hands and hope that someone will count it correctly. That is a big deal. And I just simply don’t like that. If I’m gonna sell my metals, I want to hand it to someone over a counter, and I want to trade the fiat currency for it, for the value of it, whatever I’m exchanging it for. And the ease at which you can sell it, it’s like the same problem with stocks, and other traded assets. That creates a volatility, and volatility is bad. That’s one of the great things about income property—it’s not very liquid. In fact, it’s pretty illiquid. And liquidity creates volatility. Illiquidity creates less volatility. I don’t care what you’ve heard. If you’ve heard opposite—because I heard an idiot on CNBC saying, well, liquidity in a market helps reduce volatility. Completely untrue. Liquidity creates more volatility.
And the other thing here is that the tax advantages, again—you can trade your income property all your life. It’s the most tax-favored asset in America. 1031 exchanges, you can defer, defer, defer, and never pay gain. And really, if your metals go up in value, is it real dollars, or is it nominal dollars? So, just getting back to this little exchange here, we’re almost finished with it. So Bob says, after I send him that article—I posted the link for it—he says, dude. Seriously? (With about five question marks). And I said, yes. I do a lot with precious metals. However, it is a defensive strategy, where income property is far more powerful as an offensive strategy. Metals are a one-dimensional asset class, and income property is a multi-dimensional asset class. Another person, Patrick, chimes in, says, amen, Jason. Preach on. Bob says, you’re preaching to the choir. I guess you didn’t look at my profile. But real estate is still losing value. The bottom hasn’t hit yet. The big real estate investment is apartments right now. Single family homes are flooded with foreclosures. I’m all in with carrot bars. And he says, go to www.carrotbarstv.com and you’ll see why. And then Patrick says, I agree with what Jason says in regards to offensive versus defensive. As far as what you say, I agree too. (He’s talking to Bob.) Not all real estate markets are going to be hit like California when the flooding of foreclosures begins.
And what he’s referring to, by the way, is how banks are holding back a certain amount of foreclosures, and releasing them slowly, so as not to really, really impact the market in any big way. And I agree, there is some truth to that. But again, these are all high land value markets that people are comparing to the low land value, or really, free land markets, that we recommend, okay? Where you’re buying far below cost of construction. So there’s your safeguard, okay? So, what I go on to say here is—well, wait. First there’s an exchange from Bob here. Bob says, everything goes in cycles. Look up Mike Maloney—and again, we’ve had on the show Mike Maloney’s number two guy—and then he says, he’s Robert Kiyosaki’s gold advisor. Well, we had Robert Kiyosaki on the show. We are in the precious metals cycle right now. When it peaks, you turn that gold into cash flow producing real estate.
Well folks, that sounds ilke a good strategy to me—if the metals market wasn’t manipulated, wasn’t subject to manipulation, and if we knew when that manipulation would end. None of us do. And I said, Bob, yes. Real estate is still going down. If—and that’s a big if—you look at the completely limited—in other words, bogus, in many ways—Case-Shiller Index that only profiles 20 of 400 markets. That’s just 5%! The 20 markets Case-Shiller does profile include 14, nearly 75%, that I wouldn’t touch with a ten foot pole. So, again, completely ridiculous. And then Bob says, did you go to www.carrotbarstv.com yet? And I said, yes. I agree that gold is better than fiat currency. But that isn’t the issue at hand. Gold and silver are money, but money isn’t an investment. It’s just money. I’ve been predicting the FDIC collapse and bailout for three years now. So—when I say that, I was referencing his website that he recommended, and his video. Folks, the gold bugs—they are right. They have the absolutely correct premise. But they have a limited, defensive-only solution. That’s what I want you to understand. Yes, that was me pounding on the table on purpose, because I want to drill that point home.
So with that, let’s go to our guest today, a friend of mine, a very knowledgeable guy, and a gold bug, I have to say. I think that’s a fair statement. Daniel, what do you think? Are you a gold bug? I think you are a little bit of one, so I thought this was timely to bring that up, and compare and contrast the gold versus income property difference. Again, I think the metals are fine. I just think they’re a limited, defensive strategy. That’s all I want to say. I hope everybody gets it. And I won’t belabor the point anymore. Alright. Let’s go to our interview. Join us for Meet the Masters. Call us if you have any questions on income property investing. Go to www.jasonhartman.com; if you inquire on our website, we’ll be glad to help you any way we can, and we will be back with the interview here in just less than 60 seconds.
JASON HARTMAN: Are you aware that the largest transfer of wealth in human history is underway? Are you concerned about protecting your income, savings, or home equity? All these bailouts benefit the Wall Street crooks and the Washington elites, while costing the middle class. Experts are predicting difficult times ahead. The only question is, where will you and your family end up? With the haves, or the have-nots? My name is Jason Hartman, with Platinum Properties Investor Network. For two decades, I’ve made a small fortune in the most historically proven wealth creator. Don’t be the victim of Wall Street fat cats who line their pockets with your pension funds. We can teach you how to protect yourself and your family in these wildly turbulent financial times. Create and protect your nest egg the same way 85% of America’s wealthy do. If you’re interested in the most innovative financial education around, it’s urgent that you register for our next event. Learn more about this outstanding event, and get your free CD, at www.jasonhartman.com. That’s www.jasonhartman.com, or call, 1-800-40-JASON. That’s 1-800-405-2766. Your investments could be gone tomorrow. Protect yourself, and act today.
JASON HARTMAN: My pleasure to welcome back to the show Daniel Ameduri! And he’s with www.futuremoneytrends.com. He is the chief strategist, and an expert on inflation. And you’ve heard him before on the show, and I’m sure you’ll find this interview to be quite fascinating. Daniel, welcome! How are you?
DANIEL AMEDURI: Good, good. Thanks for having me on the show again.
JASON HARTMAN: Well, my pleasure. So, 2012 is upon us, and everybody’s out with all kinds of predictions. Most of them are completely meaningless, in my opinion. Some are meaningful. They all have maybe a little bit of truth in them, but that doesn’t mean you should believe all the rest of it. And what are your thoughts about this year? A lot is going on. Europe is in major crisis; the US is in crisis, although many refuse to believe it, or act in any way that is in accordance with the crisis we’re in. But, what do you think is going to happen this year?
DANIEL AMEDURI: Well, you know, with predictions when it comes to economic, they’re always very difficult because of central planners. So not only do we have to look at the macroeconomic data like demographics and different things that are going on in trade, and GDP, unemployment—so we can see those trends and try to make a prediction on what’s going on with those trends. But then we have to also try to predict what the human reaction will be at the central banks. So taking that into account, looking at how the economy is going right now, I would say that when it comes to the highest confidence prediction I can give you is that we will have some type of quantitative easing three begin. It might not even be called quantitative easing three, but it’ll definitely be a new bond purchase program, specifically of US treasuries, by the Federal Reserve. So, it’ll be the continuation of the monetarization of debt that we’ve seen since early 2009. And I really think it’s gonna happen for a few reasons. Number one, the economy is absolutely deteriorating when it comes to the real unemployment number.
We have a major debt crisis in the United States, when it comes to people purchasing out treasuries. We literally had four weeks, or five weeks, of foreigners having a net sale of US treasuries. In fact, a few weeks ago was actually a record exit of foreigners. So, we’re not seeing a huge avalanche, but certainly foreigners are setting themselves up to slowly reduce their exposure to US debt. Now, we need more people to buy our debt than ever, though. We have $15 trillion ARM, and we have—and we need more debt. We’re gonna need another $1.2 trillion in deficit spending for the fiscal year of 2012.
JASON HARTMAN: Let me just break in there, Daniel for a moment. I want to comment on, or have you elaborate on some of those remarks. So, first of all, you say the $15 trillion ARM. You mean adjustable rate mortgage, right? So what that means is, the rate at which the US borrows to finance its completely ridiculous over-the-top debt is adjustable rate, right? Is that what you’re talking about?
DANIEL AMEDURI: Absolutely. It is adjustable. It may be a three month treasure, two year, or ten year. But you know, it is—it is priced by the market. So, without the Federal Reserve, we would be paying a much higher interest rate.
JASON HARTMAN: Right. And so, we’ve got—the reason, just to kind of come full circle on that and explain it—the reason the number of foreign buyers for treasuries is so important, is because that dictates our ability to spend recklessly, and to not really let the chicken come home to roost, if you will; to keep spending, and keep up the financing scheme that the US has created, and foisted upon the world. But also, it really dictates interest rates. And the amazing thing, Daniel, and maybe you can comment on this, is that we don’t have higher interest rates by now. I am still shocked and awed at that, because by any sensible understanding of economics and international monetary policy, we should have higher interest rates by now. But somehow they have managed to keep the scheme going longer, longer, and longer, and kick the can down the road more and more. Your thoughts?
DANIEL AMEDURI: Well, it’s because of [unintelligible] quantitative easing that’s causing that artificial demand. So, as long as they have a huge demand for treasuries, they can keep interest rates low, and that’s exactly why the Federal Reserve will have to step in and continue this program; because there just isn’t enough demand for treasuries to keep rates this low. And of course, as you know, if rates go higher, it’s going to dramatically increase our interest spending, and of course, it’ll cause us and force us to borrow more money. Because we’re literally borrowing money to pay the interest on previous debts. We’re not making any principal payments on our debt. So, as long as the Federal Reserve is able to continue this quantitative easing, which they could forever, technically. However, we don’t know how long people around the world will accept this. The only other reason people want treasuries is because they have to purchase commodities and do a lot of different transactions between other sovereign nations in dollars, so it’s a strategy to hold dollars, since you’re going to need them and use them. But if people continue to see that we’re just out of control—which, I mean, to me and you it’s obvious, and to many people listening, it’s very obvious. I personally think the $20 trillion market is gonna be a very psychological level for market, and for people who are interested in buying our debt.
JASON HARTMAN: Yeah, absolutely. Well, one of the things I’d like to just comment about that is, the higher interest rates that we must ultimately, inevitably face in our future—there’s just no way around it. And the question is, just how long can you kick the can down the road and not see the consequences of this kind of spending, and these kinds of policies. But the higher interest rates really would lead to a stronger rental housing market, and I know we were just talking about real estate before we started on the show here, and it would lessen the homeownership rate. It would lessen the number of investors entering the market to provide rental housing. And as long as the population either stays flat or keeps increasing, which it is, that just means one thing: it means people have to pay more for housing, and it means a stronger and stronger rental market, where landlords benefit. So, one of my big strategies is, you lock in on this three decade long fixed rate debt now, and you let inflation pay it off. You look at these favorable trends where there’s going to be a lower homeownership rate. Every 1% reduction in homeownership rates equals about 1 million new renters, and I just love that equation. I know even you, who’s more of a precious metals bug than I am—and I agree that precious metals are fine—are seeing that. It’s a pretty good trend, I think, huh?
DANIEL AMEDURI: Well, yeah. I think [unintelligible] paying off those mortgages, or seeing those mortgages go down in inflation terms; you know, having the precious metals, you can use those precious metals at a later time to purchase more real estate, or to pay off the real estate that you have. When it comes to, you’re saying, as far as the rental market, I couldn’t agree more with you, because that’s exactly what I’m seeing in my own personal area. I live in Southern California; there’s a lot of foreclosures. A lot of people in foreclosure can’t buy a home now, so they’re renting. So, you’re seeing interest rates go up as you’re seeing payments go higher for people; you’re right—you’ll actually see the rental market become even stronger. The only thing I would add, and I’m sure you probably agree with me, is you just want to be selective about where you’re going to buy. You certainly don’t want to buy in certain areas amidst the economic devastation, during an inflationary depression in the US. So, strategic areas that are booming? Specifically, I mean, a lot of [unintelligible] come to the first problem I had is Texas. Strategic areas that are booming would be highly advised for rental properties, especially right now; again, you can lock in ridiculously low payments. I mean, I know people literally bear a $500,000 mortgage, and they’re paying around 400 bucks. That is just a ridiculous payment. Especially as you’re locking it in in dollars.
JASON HARTMAN: Yeah, you’re locking it in on ever-depreciating dollars, and you’re locking it in till 2042. You know, Daniel, how much do you think is going to change by 2042? We’re talking about predictions for 2012, but I think by 2042, we will see, maybe, we won’t even be on the dollar anymore at all. And we will see pockets in various places around the globe of civil unrest, for sure. Maybe widespread civil unrest. We will probably see states secede from the Union, in the United States. That’s been my prediction for a long time. Some people think I’m nutty saying that. But I think there’s gonna be a big states’ rights movements, as they see a bigger, more intrusive, more irresponsible federal government than ever before. And Texas will probably be the first to go. My prediction’s been it’ll become the Hong Kong of the United States. In other words, the freer place where the ambitious people go, to make money, and produce value in the economy. And just a lot of stuff! This is an amazing time in history.
DANIEL AMEDURI: Yeah, and I agree with you about the currency. I mean, there’s no way we’re going to have the dollar in its current form. If you go back, I mean, we had the Greenbacks, after the Civil War. We had, during the Revolutionary War, we had the Continental; of course, 40 years ago, we had a dollar that was backed by gold. So, today we have a dollar that is a Federal Reserve note, an instrument of debt. So actually, people may be shocked to hear that we actually may have a different currency. But actually, it’s not that unusual in our history.
JASON HARTMAN: Oh, no it’s not at all! And we’ve had three different central banks in this country! It’s not like we’ve had the Federal Reserve forever—thank God, we’ve had them too long. But that changes too. So yeah, you’re absolutely right.
DANIEL AMEDURI: Going back into the predictions, as far as states seceding from the Union—yeah. And I think that’s important for people to know that, because even if it didn’t happen, we’re definitely going to have civil unrest. Because the fact is, when you look at from here to 2042, or just from here to 2020—I mean, you’re looking at situations where you’ve got four grades in metals being mined have fallen 95% in just the last 75 years. So, the industrialization and the idea of having everybody be like the west, where everybody has their cars, their iPads, their iPhones—but the west did it, and just completely depleted a lot of these huge resources that—we haven’t discovered anything like the resources we discovered in the last 100 years. So, you know, the idea of China and the rest of Asia, and the Middle East, and Africa, all becoming westernized—you’re really looking at a situation where you get them literally having resource wars. And you may already be seeing that with Iran and Iraq.
So, if you look at the future, definitely the resources are scarce, and people will say oh, there’s no peak oil, there’s no peak silver, there’s no peak gold. Fine, that’s—if you want to believe that, fine. I’m not gonna argue with you. But if you look at the actual data, we have peaked in oil discoveries. If you look at how much silver was produced in Nevada—15 years ago we were producing 25 million ounces of silver a year, and last year we produced 7 million ounces. So, we’re finding less of it, and we’re producing less of it, and it’s across the board for most resources.
JASON HARTMAN: There have only been a few ways to really create a lot of wealth throughout history. And the first one, my favorite, is real estate and resources. The other one would be banking—in other words, find a way to get in bed with the government and rip off the public—and you know, the banking and Wall Street, those kind of go together. So that’s number two. And number three is media. Obviously the media business, whether you’re a celebrity, or you’re Rupert Murdoch or Ted Turner, very lucrative. And then the other one is technology. Steve Jobs, Bill Gates, etcetera, etcetera. So those are really the four ways to wealth, and I’d say that the most accessible way for everybody listening is real estate and resources. You’ve got to control those things. And if you control them, largely with other people’s money, using leverage to do it, you’re really in the banking business, in a way, too. So, you’ve tapped two of the four—
DANIEL AMEDURI: Yeah, and it’s hard assets.
JASON HARTMAN: Yeah, right. Real estate and resources are hard assets, exactly. Physical assets. Couldn’t agree more. Well, Daniel, what other predictions do you see for 2012, and even go beyond 2012, if you like. Because obviously we’re not just talking about one year here. But this is a rather ominous year. Some people think the Mayan calendar will come home to roost on December 21st. Who knows, there’s just a lot of really insane stuff going on right now. We’ve got an election—any thoughts you have about the political environment, too, would be great, we’d love to hear it.
DANIEL AMEDURI: Yeah, I think this is the year of Ron Paul. And not necessarily, that doesn’t mean he’s gonna win the nomination. It doesn’t even mean he’s gonna win the presidency. But this year, nobody will be more influential in the 2012 elections than Ron Paul. Because Ron Paul—when he converts somebody to the liberty cause—the cause of individual rights, the, I want to say live and let live. But what I mean is, as long as you’re not harming other people, you’re allowed to make your own choices, and have free will, and do what you want with your property, and keep the fruits of your labor. Once he converts somebody to that idea, that’s really a Founding Fathers type principle and ideology. Once they’re converted, there’s no going back for them.
JASON HARTMAN: And that’s a wonderful thing, yeah.
DANIEL AMEDURI: When Mitt Romey and all these other people think that okay, at the end of the day, everybody’s gonna endorse Mitt Romney, we’re gonna move forward—it honestly doesn’t matter. Even—I don’t think he would, but even if Ron Paul endorsed Mitt Romney, none of his followers are gonna vote for Mitt Romney, because you can’t. Once you know about the Federal Reserve, once you understand—we’re literally allowing ourselves to be taxed on our income so we can prop up dictators and spend just billions, or trillions, literally, overseas. Once you understand the difference between military spending and defense spending—Ron Paul did a great job in his debate. He talked about defense spending as protecting your borders; military spending is spending a billion dollars on an embassy in Iraq, which he considered a waste of money. I just really see this being the year of Ron Paul, and I think he does have a chance to win the republican nomination. If he did win the republican nomination, I have no doubt that he would go on to be our president, because the avalanche of support for Ron Paul, if he won the nomination, would be so massive, and he draws so many independents, and he can even draw in liberal democrats, because of his foreign policy. Because in the end, there’s one thing people can agree on, that want to be fiscally conservative or just less empire-like. And that’s, we have to change our foreign policy, and the way we treat other people.
JASON HARTMAN: Well, fair enough. But I will say, Daniel, that, as much of a fan as I am of many of Ron Paul’s ideologies, I wish he would compromise a bit. I think he’s just too radical on the foreign policy stuff. He may be, as a purist, he may be correct. But you know, to just up and, like, pull out of any support for Israel, to say that you can be so isolationist in today’s world, it may be possible, but if it is possible—and I’m not sure it is, okay? But if it is, it has to be gradual. It would be just too much of a shock to the system. I mean, the way we’ve been doing it is wrong, I agree. We’re just making too many people angry at us. There is definitely a blowback issue. But I think just start moving in that direction, and start getting some of the people that won’t support him, over to his side. Because the thing is, with Ron Paul—and I hate to keep talking about him on the show, because I feel like I talk about him too much, to be honest with you. But the thing with him, is that he’s the only guy that would really change anything. And I love that, because we know a lot needs to change. But I think he’s just gotta loosen up on some of his—I mean, he’s not gonna be president. I don’t think there’s any chance of it. At least not this time around. But I just think he’s gotta come to more of a—more a little bit more toward the center on some of that stuff. That’s all.
DANIEL AMEDURI: Well, on his foreign policy, I mean, for sure, in my opinion, he’s definitely not isolationist, because he does want to trade with all the people. Just like we traded with China and Russia, he wants to trade with Iran. Typically, economies that have good business relationships don’t want to go to war with each other. Because it’s kind of like the situation China’s in—you don’t want to hurt the US too bad, because you obviously have a pretty good consumer here.
JASON HARTMAN: Well, nobody wants to kill their customer.
DANIEL AMEDURI: Yeah, so, and you know, as far as—it’s a really rough, and obviously, we would have to talk about this for days, to go into the full aspects of the foreign policy. Because a lot of it is, our foreign policy has created a mess. So now we’ve created this mess, and it’s kind of like, you put somebody who’s doing karate in a headlock, and they go, okay, now get out of this. It’s like, well, the whole point of karate is to prevent you from getting me in a headlock. Once you’ve already got me in a headlock, maybe they’ve already won. Maybe they’ve already choked you out. But, so, we’ve created this huge disaster in the Middle East, and now, it’s like telling Ron Paul, okay, now fix it. And it’s kind of hard to fix it, because you’ve already messed it up so badly. And you know, when it comes to Israel, I mean, we’re sending billions to Israel. But we’re sending billions to everybody around Israel—
JASON HARTMAN: I know, that’s the problem. We’re doing exactly what the Wall Street firms do, in a sense, with our foreign policy. They support the left and the right, politically, so that they can buy off the politicians and get all the legislation passed in their favor with their lobbyists and so forth. And that’s really what we’re doing with our foreign policy. I mean, two years ago—I was listening to one of my old seminars, where I cited a news story about how two years ago, we were talking—maybe it was two and a half years ago—we were talking—it was in the news, it was major mainstream news—where we were talking about selling military equipment to Libya. To Gaddafi! And look what happened. I mean, all of these people, like Bin Laden, Hussein—20 years earlier, they were our friends, and we were propping them up and giving them money. Then they become our enemy. It’s just the stupidest thing ever. It’s unbelievably ridiculous.
DANIEL AMEDURI: Unfortunately, most people who do have issues with Ron Paul’s foreign policy, like you expressed you have, most people don’t even acknowledge that. So they just totally, completely write him off as a kook. You know, for me, it’s really about—it all comes down to property rights, and the fruits of my labor. Because the fact is, I have a 2 year old, and I have a 4 month old. And I am unable to give them everything I earn, and buy them the things I want to buy them, and spend the time I want to spend time with them, because I have a government that takes my income, and then redistributes, and distributes my wealth, all around the world. So in the end, when it comes to our foreign policy, when it comes to our entitlements, whether it’s domestic—for me, it’s a real personal issue, because it’s like, I just don’t like people taking my money to spread my money all across the world. And I think if Americans truly understood it—I mean, it’s so funny. Americans love to get caught up in, oh we want a 9-9-9 tax plan, or oh, we want a 20% flat tax, or we should have this perfect progressive tax, and it’s like, wait a minute. You guys are fighting over what’s yours.
JASON HARTMAN: You’re fighting over what’s yours. That’s a great quote.
DANIEL AMEDURI: It’s your money! It’s your money. You know, it shouldn’t be—you don’t need a 5% tax cut. We had no income tax all the way till 1913. I mean, you can still have a gas tax, you can still have local taxes, and state taxes, and sales taxes—there can still be taxes to fund government. But the taxing of the income is absolute tyranny, because, of course as you know, you have employees. You get taxed on your income, and then everybody you pay has to pay taxes on their income, and of course, everywhere we go and spend our money, we get taxed again. We get taxed on our property. And then everybody who receives that money—I mean, a dollar is taxed an impossible amount of times.
JASON HARTMAN: They’ve done studies about that, and I read one that was talking about how like a loaf of bread that you buy at the grocery store is taxed over 200 times before you buy it. If you don’t think that goes into the price, and it’s factored into the price we all pay, you’re not paying attention, because it certainly is. Let me take a brief pause; we’ll be back in just a minute.
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JASON HARTMAN: But hey, let’s get back to predictions. So, another round of quantitative easing. Obviously they’ll give it another name. What are we going to see, inflation rate wise? I keep waiting for this massive inflation to come out. I think that the inflation right now, the real inflation rate is around 9, 10%. Of course, that’s not the official number. Never is. But we’ve gotta see a future with 20, 30, 40, or maybe a lot higher percent inflation, annually. There’s just no way around it, ultimately. The question is when. Your thoughts on that?
DANIEL AMEDURI: I don’t think we’re gonna see it this year, unless there’s something, a situation like where there’s a war with Iran, and oil was $200 a barrel. Obviously if our transportation expenses—you’re paying $7, $8 a gallon for gasoline—you’re going to see a significant deflationary shock to the system in the fact that, in the sense that people aren’t going to be able to consume as much. So there’ll be a lot of businesses closing. But you would also have severe inflation—price inflation on things you need, like food. So if we were to have some kind of oil shock, we could definitely see it this year. Otherwise, I don’t see the actual, the description of having that severe price inflation for a few more years. And I almost—it’s more of the loss of faith in the currency itself.
Inflation is the expansion of the money supply. Hyperinflation is the loss of faith in the currency itself. And I think that’s what we’re going into. At some point in time in 2012, or early 2013, I think we’re gonna see a deflationary shock to the system. I think it’s gonna be just like 2008. It’s gonna be a huge sell off in the stock market; people are gonna be looking for liquidity. You’re probably gonna see a pretty strong dollar rally. And then at that point, I think the Federal Reserve will unleash everything they’ve got. The world will unleash everything they’ve got to keep the system propped up. And when they do that, I think that’s when we cross the line from deflationary shock, which will be very short term, to a hyperinflationary event, where literally, the big money, the hedge funds, the big investors, foreign governments, are going to be flooding in the hard assets, like real estate, like gold, like silver.
China, you’re already seeing them make their strategic moves in not only buying up hard assets, companies with hard assets—they’re loaning money to the resources companies. They’ll loan more money to resource nations than the IMF did! So, I think that’s, at that point in time, and I would say that’ll probably be around 2014. Maybe 2013, but 2014, 2015, you’re probably going to see some type of major currency event with the US dollar. Again, there’s so many wild cards, that we don’t know exactly what the central bankers are going to do. But just to throw another wild card in 2012, that people should be watching, is the Euro! I mean, we could literally see Greece default any day. Even a chief analyst at S&P recently said that he said, we will see Greece default. So if you see Greece default, all of a sudden you throw in another wild card, you’ve got a huge dollar rally that’s gonna happen. That will force stocks down. At some point in time, I think you can actually see gold and the dollar rally together this time, and if you saw the gold and dollar rally together, at some point in time, we would either see the dollar eventually fall, gold continue to go up, because eventually investors would pick their safe haven. And you know, David Morgan puts it best. When you step back and look at it, everything you sell’s gonna be converted into currency, so there will be a strong demand for dollars in any crisis.
JASON HARTMAN: Yeah, that’s an interesting point. Because that’s what we saw happen in 2008, actually. As liquidity events were occurring, it was soaking up dollars around the world, and so many people couldn’t understand that. And then there’s all this money printing, and the bailouts, and people were saying, why don’t we have inflation? And the other side of that they didn’t understand is because we had credit tightening. It’s money supply plus credit supply that creates inflation or deflation. And it was amazing to me how I’d be watching CNBC, I’d be reading the Wall Street Journal, and all the renowned economists didn’t seem to ever address or understand this simple, obvious issue. It was obvious to me, but I guess it wasn’t if you went to an Ivy League school. It just kind of blew my mind.
DANIEL AMEDURI: And people normally look at it as a stool with three legs. There’s inflation, deflation, and hyperinflation, which is a loss of faith in the currency. So a lot of people think of inflation, and then you move to a certain percentage of price inflation, and then all of a sudden you redefine it as hyperinflation. I really don’t look at it that way. There’s inflation, there’s deflation, but then there’s a whole nother thing out there called a loss of faith in the currency, which is hyperinflation. And so, once people lose faith in the currency itself—once investors lose faith in the currency itself—that’s when you have your big problems. And yes, you’re going to see prices go up, and it’s going to feel like inflation, but it’s actually going to be just a complete collapse of your currency. So, whether the Federal Reserve prints trillions of dollars, or just tries to maintain the situation, the dollar’s entire value is based on the perception of the US having a strong economy.
Once we have the next massive deflationary shock, and our federal debt is nearing $20 trillion, it won’t matter what the Federal Reserve does, if they print money or contract the money supply. Deflation, inflation, it’s not going to matter. Because at that point in time, people are going to have a loss of faith in America. And when they have a loss of faith in America, that’s when you have a big problem for the US dollar. So, you could have a deflationary shock, and in my thinking, the next thing that would happen, it wouldn’t take too long—I’m talking weeks, or months at the max—at that point in time, then you see a hyperinflationary event where the dollar itself becomes worthless.
JASON HARTMAN: That’s a really interesting distinction, because there’s no academic definition for hyperinflation, by the way. And you made the distinction—you call it correctly, you call it price inflation. Because the academic definition for inflation is simply, creation of money. Which everybody knows, we’ve been doing that for quite a long time, and especially lately. So, we already have inflation. We just don’t see price inflation in everything. We do see it in necessity things like food and energy, the things that are taken out of the core rate, and then, that three legged stool, where hyperinflation becomes loss of faith in the currency—I really like that. It’s not like hyperinflation is when the rate hits over 30% annually, then we have hyperinflation, or over 2000, or Zimbabwe-ish, 2 million percent annually—that’s not hyperinflation.
Hyperinflation is really something that’s a loss of faith in that symbol, that currency. And not to be confused with money. Currency and money are very different things. Money is something that has intrinsic value. Money is resources. Currency is a symbol of resources, with a fluctuating value. And so, that’s a very important distinction there, I like that. So, here’s the thing that I always say, to be a bit of a skeptic. Everything you’re saying is completely accurate, about the US government, and the Federal Reserve, and our situation. However, and this is a giant however—aren’t we just better off than everybody else? Granted, we may not manage our money better than every other country, although, there aren’t many that manage it very well. But, we still have the reserve currency. And I admit that that could change at any moment, if other countries want to stop using our dollar as the reserve currency. But we’ve got this huge military that allows us to throw our weight around. We’ve got the economic hit men—you know, I had John Perkins on the show—and we throw our weight around a lot of ways, that I say is being used today to force the reserve currency upon the rest of the world. Your thoughts about that?
DANIEL AMEDURI: It’s true. The United States does have a significant advantage. We have the infrastructure, the businesses, the money flow is to the United States; it’s not to Hong Kong yet. China is simply not ready to have a reserve currency. There just isn’t a demand, or a transactional ability for Renminbi to be the reserve currency. In fact, the closest thing that could have been is the Euro, and nobody—Europe, it’s not gonna happen now. So, the US does have some advantages, they’ve kicked the can down the road, and here’s the big wild card: the US has the advantage that we still have the most gold. So, the US, if it were to back its currency by gold, and kind of reset the system, you know—paying off its debt with inflated dollars, having some type of type of payoffs for a few weeks or a few months, and then coming out and having a new dollar backed by gold, or backed by natural gas, or something where the US would have the ability to have that ultimate strong currency again, where the dollar is as good as gold, as it used to be.
Yeah, there are ways that the US can get out of this, where they literally screw almost everybody and still end up as top dog. And maybe that’s what’s gonna happen. I’m not saying—nobody can know what’s about to happen for certain. We know that we’re gonna go through hard times. We know we need to prepare. We know we need to make certain plans when it comes to how we’re going to make [unintelligible] need to invest in our personal selves. You know, invest in our own businesses, be wiser about what we spend our money on. But when it comes to what can happen with the sovereign nations, with what the central banks are gonna do, certainly the United States has formed the whole situation of what’s going on around the globe, financially and even regionally on what’s going on with different countries and their attitudes towards the US or towards each other. So, yes, the US does have an advantage in the sense that—I can’t think of a word for it, but I mean, I guess, they have the advantage because the US is the architect or the current financial system.
JASON HARTMAN: So, that’s why the doomsday scenarios, I can totally see how they play out on one hand. But on the other hand, I see exactly what you were just saying—that there’s a lot of things the US can do, even if everybody loses faith in the dollar—to just keep it going. That’s the wild card. The central planners are the wild card. You can’t judge all these things based on pure logic, because you just don’t know the reaction of the central planners and what it will be. It’s unpredictable. And that’s what makes it difficult.
DANIEL AMEDURI: Yeah, and it you look at like what China—China and Japan just did something that where they would be doing their transactions direct currency trade. So, they’re no longer gonna be using the dollar. They’re now gonna be using their own currencies to do trade. Now, India and China have done this with Iran; so has Russia, so have a few other countries. So, the dollar is losing some of its appeal as the reserve currency. The country would literally want to do their transactions in a stable medium of exchange. So, in my opinion, I think the US’s advantage is for a crisis to happen sooner than later. Because if these countries keep signing these treaties to do currency trades in their own respective currencies, if more countries in the Middle East want to accept different currencies for oil, then you’re definitely going to see the dollar lose its reserve currency status in 8-12 years.
So, if the dollar—I think the dollar is gonna lose its reserve currency status. But if there’s any hope for it to keep its reserve currency status, it’s to the US’s advantage to have a complete currency crisis now. Let the Euro fail. The dollar will be the only thing left standing, and then if they did some type of reset where they converted the dollar to gold, I think that would be the best way out for the US, with having a reset. Again, this doesn’t make a difference as far as what’s gonna happen with unemployment and the Baby Boomers and the retirement generation, but it certainly, if the US wants to maintain that role of reserve currency, I think a crisis happening from 2012 to 2015 is more ideal for the US than having a crisis in 10 years down the road, where China, the Renminbi is a much stronger currency, and already doing direct transation with its major trading partners.
JASON HARTMAN: Yeah, very good points, very good points. Well, what other predictions do you see for 2012, just in wrapping up here?
DANIEL AMEDURI: Well, I can’t end this show without giving a prediction on gold. I really see gold ending the year somewhere between $2500 and $3000, and the reason—three reasons for that. Number one, we’re gonna see more quantitative easing. Number two, we’re going to continue to see the Euro crisis, only, unlike the last two years, it’s going to look more and more as a currency crisis. And number three, Iran. I—my gut instincts, when I look at what’s going on, I really do think we are going to do something about Iran this year. It’s an election year, and I want to say that that’s gonna play into it, although it would be very beneficial for Obama—you know, sitting presidents do not lose during wartime. But if we see that oil spike, we’re going to see a huge gold spike as well.
JASON HARTMAN: Pretty interesting stuff. And then the question will be, did the gold go up, or did the dollar just go down a lot more than anybody’s willing to admit? So—
DANIEL AMEDURI: Well, that’s funny, because they both might go up. You might see the dollar rallying with a war in Iran, and you might see gold rally.
JASON HARTMAN: Yeah, I know that you said that—that was an interesting point! That’s a pretty rare occurrence, isn’t it? That you would see both? Because usually they’re countercyclical.
DANIEL AMEDURI: Absolutely. If you look at the dollar index chart, and gold, they’re literally, they trade inverse—there’s an inverse trade there. When you look at it, it’s just completely the opposite. But, we have seen gold and the dollar together in the last two years on occasion. And it definitely could happen, even though the dollar obviously would be losing significant value against oil. That would really be not because of the currency itself. That would be because we’re having an oil crisis. But that instability could cause people to obviously sell stocks, and [unintelligible] dollars, and of course, people who are really concerned about major instability in the Middle East would be buying physical gold and silver, so you can literally see gold, silver—the dollar index could be at 90, silver could be at 75, and gold could be nearing $3000 an ounce. And oil would be $200 a barrel.
JASON HARTMAN: Really just—it’s amazing to contemplate that. But nobody thought any of that would happen when gold was $280, and oil was 20 bucks. It’s just sort of hard for people to grasp those ideas, that a cup of coffee at Starbucks is gonna be $17 some day. Maybe it’ll be $92. It’s just hard for people to think that way. But historically, it’s absolutely happened. It’s happened, in the US, it’s happened all over the world, many, many times. So it shouldn’t be that hard to comprehend. One more thing I gotta ask you about, Daniel, and there’s an old saying about how our culture is so distracted with these stupid bread and circuses. You didn’t give us any pop culture predictions! I mean, what’s going to happen with the Kardashians, or something like that!
DANIEL AMEDURI: Unfortunately, I don’t know anything about the Kardashians.
JASON HARTMAN: Well, good for you.
DANIEL AMEDURI: I don’t even know why they’re famous.
JASON HARTMAN: Neither do I. They’re famous for being famous. Kind of like the Paris Hilton syndrome. It’s just absolute stupidity. And I really encourage folks—obviously, the listeners of this show, I don’t need to tell them, but, don’t be distracted by this idiocy in pop culture. Pay attention to the real stuff, the things that are underpinning our economy and our liberty. That’s what is important. They’re trying to distract us with that stuff. But we’ve gotta make sure we have the discipline not to get distracted, and to pay attention to what really matters. Daniel, give out your website!
DANIEL AMEDURI: www.futuremoneytrends.com. Sign up for our free newsletter; we give economic updates once or twice a week. We also have other investment ideas, and we’d love to have you as a member. And I promise you, one of those newsletters—when we send an email, we make it count. We will not flood your inbox with random emails.
JASON HARTMAN: Good stuff. And that’s www.futuremoneytrends.com. Daniel, thank you so much for joining us again today!
DANIEL AMEDURI: You have a great day, Jason.
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Transcribed by David
The Jason Hartman Team
Episode: CW 238: Price Inflation vs Hyperinflation with Daniel Ameduri Chief Strategist for FutureMoneyTrends.com
Guest: Daniel Ameduri
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