Jason Hartman starts the show going over the GOP Tax Reform and what it means for real estate investors. In the interview segment of the show, he hosts Jim Puplava, host of Financial Sense. The two further discussed the new tax reform then move the discussion into inflation. Later we hear about the motivation between different demographics, specifically the millennial group and its prior generation.
Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful Jim Puplava, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate Jim Puplavas.
Jason Hartman 0:53
Well, thank you so much for joining me today for episode number 968 968. This is your host, Jason Hartman. And today we have got a guest that I’ve been wanting to get for many, many years. And that is Jim pup lava. You know, I started listening to his podcast years ago when I started podcasting. So what are we talking about? 2005, maybe early 2006, something like that. Anyway, it was a long, long time ago, in a galaxy far, far away. And I think I heard that before. Maybe it was on like Star Wars or something like that. Anyway. Okay. So that’s gonna be a good interview coming up here in a moment. But Jim Puplavas, I’ve got to ask you, are you excited? Are you excited about the new tax plan? Well, it just keeps getting better keeps getting better. Well, the plan didn’t get better, but the articulation and understanding of the plan is getting better it is getting better. So as I sit here in San Diego, California, and I was thinking about it, and I’ve been reading about all these different things, and I’ll tell you one aspect that is pretty darn exciting. And I hope I’m getting this right because I almost can’t believe it. It’s just too good to be true. If we got any CPAs out there listening, if I’m getting anything wrong, hate fact check me always, always always. And hey, feel free to fact check. Well, not fact check but opinion check and disagree with me. You know, you can go to Jason Hartman comm slash ask. And instead of asking me something which you can do as well, you can ask some questions. You can give me a hard time. Okay. You can argue with me. You can tell me. You know, Jason, your political ideas are so bogus I don’t know where even come up with this stuff. Hey, you know what listeners? Maybe some of it is just for entertainment value, or some of it might be to get you a little riled. Yeah. Or some of it. Hey, it might just be me because I’m riled. I’m a curmudgeon, a complainer some from time to time, you know. So anyway, hey, but the new tax plan Wow. It’s so good. It’s so good. Okay, so, bonus depreciation on our real estate. We all know that depreciation. It’s the coveted holy grail of tax benefits. Why is it a coveted holy grail? Because it is a non cash write off. It is a phantom write off a phantom deduction. Or you don’t have to write a check to get the benefit. Right. For any other tax benefit. You basically got to write a check. Okay to get the benefit. You want to deduct Some expenses. Well, if you’re an independent contractor or you own your own business, spend some more money, write a check, make a deduction, fine. If you want to donate to charity, donate to charity, take a deduction, fine. That’s all well and good. But depreciation is a different animal. It’s a different animal. And that’s what makes it so beautiful. Now, in this way, that we’re going to talk about it here in a moment. One of those is the totally different animal type of depreciation. And one of them is a really just allowing you to expense it, rather than depreciate it over a long schedule. So in both ways, they’re both good. They’re both really good. This thing is great for real estate Jim Puplavas. And as I told you, during the campaigns, the presidential campaigns, I said, If Trump becomes president, he will be what he will be our first real estate president, our first real estate president, at least in modern history, okay. So under the old blog, if you are going to do a major improvement to your property, say you’ve got a single family home, it’s a rental property. And you’re going to replace the, you know, the heating and air conditioning unit, you’re going to replace some of the other major systems, you’re going to, you know, do a new roof, right? And you could depreciate these on a single family home over 27.5 years on residential property. on commercial property, hey, it’s 25% worse, basically, approximately, because you got to depreciate it over 39 years. And we all understand the time value of money, the time value of money, I would rather have the benefit of the deduction sooner rather than later, and I’d rather put off expenses into the future. I’d rather Spend money later and receive money now, this is the basic concept of the time value of money, which it plays into inflation or deflation discussions, right? The time value of money every So, okay. And then we look at my earliest mentor and teacher on the subject of inflation. Who was he? He was a cartoon character. He was wimpy and Popeye and wimpy had a famous saying when he used to say, I’ll gladly pay you Tuesday for a hamburger today. Or maybe it was a cheeseburger. I don’t remember. I think it was a hamburger. I’ll gladly pay you Tuesday for a hamburger today. Now we all know when he wasn’t going to pay you at all right? But he was putting off the expense into the future and taking the benefit of the hamburger today. Right? And hate that was a pretty good philosophy. It still works today. Many years later, after Popeye cartoon was created, right? So wimpy understood inflation. And he taught it to me and he taught it to probably millions of other people. I don’t know if they picked up on it, I shared it. Anyway. Yes, here I was probably seven years old watching a cartoon and thinking, now I understand the time value of money. I can do a net present value analysis, and I can understand inflation and deflation and monetary and fiscal policy, all at age seven by watching Popeye, and then I would go eat my spinach and be really strong. Okay, enough of that. So we’d rather have the benefit today, right. So commercial property, never as good on the depreciation schedule as residential income property. But But wait, there’s more, as they say on those cheesy infomercials at 2am when you have insomnia under the new plan, under the new Plan thank you to our first real estate president hate him if you want this new tax plan, it’s really good. It’s really good. So under the new plan, the bonus depreciation rules allow you to make these things deductible you can deduct now fact check me on this but I am literally reading something that says instead of deducting that new roof or that new hva AC unit through normal depreciation schedule, you can deduct 100% in the year it is added. Whoa Katie bar the door As the old saying goes right? That is in frickin credible for real estate Jim Puplavas. Now the next time I get an email from some of our Jim Puplavas, and they’re complaining about some big expense They had on a property, I want them to calculate in their head, their tax benefit, and understand that the government is essentially a what? Well, it depends on your tax bracket. Depends what state you live in. It depends on a few things. But the government is essentially an approximately a 40% partner in any losses you have, but you get 100% of the value of the improvement to your property. Right. But the government pays for about depending on tax brackets, etc. About 40% of the cost, probably for most people listening, right. So that is a pretty awesome deal. Pretty awesome deal. Right? Wow. There’s any CPAs out there and I’m getting this wrong. I mean, I’m, I’m reading it, okay. So, you know, and everything on the internet is of course true. So it must be true because I’m reading it. Like everything on CNN, communist news network is true either, right, man, it’s you their truth is hard to come by nowadays folks, it really is. But we have got a very bright and interesting guest today, Jim pallava, who will talk to you about some truths in the economy. So let’s go ahead and get to that guest. I’m in San Diego now, but I am headed up to San Jose here in about a day and a half. And I will see a lot of you this weekend at Jason Hartman University live, if you want to get some last minute tickets for that we have not sold out yet, because we’ve got our big presentation on Thursday night. So we probably will sell out Thursday evening, that Saturday, March 3, Jason Hartman University COMM And by the way, for our other really cool high end, mastermind ad venture Alliance trip coming up at the Ice Hotel in Sweden. That’s going to be pretty exciting. I just booked my airfare and folks, I cannot believe I cannot believe how cheap what a bargain airfare is to Stockholm, Sweden. It’s an incredible deal. So if you want to join us for the Ice Hotel trip, go to Jason Hartman Ace Hotel calm. Jason Hartman Icehotel calm. And check that out. We’d love to see you there. Or this weekend in San Jose. It’ll be warmer in San Jose, but it’s not that warm. It’s a little chilly here in California. Okay, let’s get to Jim pop, lava, our guest today. Great interview. You’re really gonna love this, as he shares a lot of good insights on the economy. And you know, there are very few podcasts that I’d actually recommend. His is one of them. I’d recommend my own and all my other podcasts because they’re good, because hey, look who’s doing them right. A lot of podcasts out there. They just suck junk, junk, junk junk. Waste of time, don’t even bother. And some of them are big, famous podcasts. And they’re not very good, at least in my humble opinion. But Jim’s is good. The financial sense news hour. I like his show. Again, I listened to it during my formative years of podcasting 14 years ago, I guess, right. So I’ve been listening for a long time to his show. And I think he’ll share some good insights. It’s great to finally have him on the show. So here he is. It’s my pleasure to welcome someone I have been following for many years. And that is Jim pallava. He is founder and president of financial sense, wealth management and host of the financial sense news hour. And I started listening to his podcast maybe 15 years ago, when I started podcasting about well, 14 years ago, and he’s had a big impact. He’s got some very interesting insights into the economy and the markets and I do Can’t wait to have him on the show. Finally today, Jim, welcome. How are you?
Jim Puplava 13:03
Very good. Jason, good to be with you.
Jason Hartman 13:05
It’s great to have you after all these years that I’ve been listening to.
Jim Puplava 13:09
You know, Jim, you’ve got some great insights into the economy and the markets, as I mentioned, just want to talk to you about those. So here we sit with a still a relatively new administration, we’ve got a huge tax reform. And I think that’s going to have a negative effect on a lot of these high priced markets. Like, you know, my home state, the Socialist Republic of California, and I know your state and New York, these these sort of high tax areas that have been driving a lot of the producers out over the years, kind of slowly, as people vote with their feet. Do you think this will accelerate that Exodus or, or have much of an impact? What do you think about that? Let’s dive in with the tax plan. First, I think it’s definitely going to have an impact on real estate here, especially on the high end. Maybe not so much on the low end real estate. And it’s also going to have an impact on businesses and individuals leaving the state as you know, you live here. It’s a state of basically two classes of people, those that have money and those that don’t. And the situation is getting much worse. I interviewed one of the nation’s top tax attorneys out of Los Angeles. And he said, You know, he had been experiencing many of his clients were leaving the state. But he said, he has seen an acceleration in the last couple of years because, as you know, Jason, they raise tax rates in 2010 than they came back 2012 they raised them even further. We’re now the highest tax state in the country. Now, that was okay. If you were in a high federal tax bracket because you could deduct your property taxes, your state taxes. Well, now, you’ve got a limitation of $10,000 on property taxes, which is next Nothing since property taxes are high here. Yeah. And then if you’re in a 13.3% Oh, you’re just getting killed right now.
Jason Hartman 15:08
You’re getting killed. Yeah, it’s unbelievable. It is not yet another of the many examples of the disaster known as socialism, or galloping dirt it in some areas, but interestingly and in some ways we’re moving away from it thankfully after eight years under Obama, I mean, Trump is such an odd bird. You know, it’s it’s hard to figure him out, for sure. Maybe that’s intentional on his part. But I do think as we see this sort of issue with the salt areas, the state and local taxes and so forth, that is going to be a further incentive for people to leave or to not purchase high end homes and buy high end we just, you know, of course, mortgage interest now over 750,000 will not be deductible, and in a place like California or New York. Hey, that’ll barely By shelter, you know, so
Jim Puplava 16:03
yeah, that’s probably just a storage unit. Exactly. It’s,
Jason Hartman 16:07
it’s a pretty significant attack. Any more thoughts on how that might play out for us?
Jim Puplava 16:12
Yeah. There’s a book I read a couple of years ago by the credit analyst, Meredith Whitney. She’s been on the show. She’s great. Yeah. The state of the states. Yeah. Yeah. And she was talking about there is going to be this reverse migration. I mean, if you take a look at since World War Two, it was kind of like go west, young man, and everything was moving towards the Midwest and then to the west coast. And she’s talking about a reverse migration now where you you have people on both coasts start to move inland areas like whether it’s Arizona, it’s Texas, New Mexico, places like that, where the cost of living is cheaper. You’ve got and you can see this right now you’ve got some of the high tech companies were they opening up new factories, they certainly aren’t doing it in California. They’re doing In San Antonio, Austin, Texas, and they’re doing it in other places of the country where taxes are lower cost of living is lower regulation is lower. And I think this trend is just going to accelerate as a result of this tax bill, because up until this point, states like California or New York or New Jersey or any other high tech state, well, you know, the high end people, they could deduct that on their federal tax return. Well, no more. Yeah. And I was just reading in the state of Connecticut, one hedge fund manager moved himself he was a billionaire, and his whole hedge fund operation to Florida. Well, the state of Connecticut lost $200 million in tax revenues. And you know, that’s what’s happening here. But what do they do, as you know, Jason, they keep coming up with more taxes. Last year, they raised the tax on gasoline 20 cents, raise the tax on cigarettes and cigars by $2. Then on top of that, if you were Rain and you bought yourself a hybrid. Then they raised an extra $100 vehicle fee. And now they’re talking about for those of us that have solar powered homes, raising some kind of fee or an assessment on us. So, in my own opinion, they’re headed for bankruptcy because they have a pension fund that is unfunded to meet its obligations and they’re scurrying around every which way they can, whether it’s assessments on, you know, your car, it’s cigarettes, it’s gasoline, they’re just reaching everywhere they can, I mean, if it moves or breeze or walks, they tax it.
Jason Hartman 18:37
Yep, that’s true. And this is the you know, this is why I had to leave California after living there virtually all my life I left in 2011. There are so many hidden taxes, in terms of things like traffic tickets, and a government that basically gym becomes predatory. As it becomes desperate. It becomes predatory on the citizens. You know, the goddess Government has gone into business against the citizens, and they look for the low hanging fruit, you know, and they always do it under the guise of public safety or whatever, they always have a reason, right? That’s just what they do. But you know, the question is, how much will people tolerate? And what will be the ultimate outcome? So, I mean, California won’t really go bankrupt, right? It’ll get a federal bailout. It’ll what will it do? I mean, you know, like, what, what’s the endgame here for the all of the states that are in this predicament? And it’s not just California by any means. I mean, a lot of municipalities also are in trouble. And we saw some municipal bankruptcies in effect. I think it’s kind of different how they do it, but the concept is similar. What’s the end game? I mean, I think it would just be a federal bailout, you know, print more money and just bail them out. That’s what they’d have to do right or wrong.
Jim Puplava 19:55
You know, one of the things I’m watching there’s going to be some court cases coming up in Illinois. They have a severe pension problem. And as you know, with bankruptcies here with any of the cities, the bondholders got the shaft, and the courts would always uphold the pensions is sacrosanct. And I think that’s going to change I think you’re going to see, eventually, just as defined benefit pension plans went the way of the dodo bird and corporate life, you’re going to see it at the government level, governments simply will not be able to sustain the type of pensions and the salaries. I mean, one of the things that you see here, and this was brought up in a recent study on the cost of education, there are so many administrators and one of the little things that they do here is say I’m an administrator. I don’t know what I’m doing, but I’m getting paid a quarter million dollars a year, or what I do is about five years before retirement, I retire, receive a pension. They hire me back as a consultant. Now I’m making double the money, and I double dip five years before I retire
Jason Hartman 20:57
right on the national level. We’ve talked A lot about social security. And, and basically, I think 2027 is the number. You know, I’ve had Laurence Kotlikoff on the show a couple of times, and you’ve probably interviewed him as well, I assume. And he’s done a lot of studies about the unfunded entitlements, unfunded mandates coming at us over the next 15 years. And, boy, that’s gonna be interesting.
Jim Puplava 21:23
I mean, I think eventually, what they’re gonna do is if you take a look at social security, it was tax free. And then and the Social Security reform in 1984, it became subject to 50% taxation, then under Bill Clinton became subject to 85% taxation, you know, eventually they’ll go to 100% taxation, and then they’ll go to some kind of means testing. If you make X amount of dollars, you’d lose so much of your Social Security benefits to the point. If you’re Larry lots of bucks, they just basically phase it out.
Jason Hartman 21:58
Well, you know, we’ve seen this People are moving to Puerto Rico, you know, there’s a huge tax incentive there of it. You may not have electricity, but save a lot on taxes. I just sort of don’t know what comes of this. I mean, is there going to be a significant Lea inflationary future? inflation seems to be the greatest business plan for governments because they can just continue to buy votes, they can spend, they can mismanage and they can just inflate the problem away. You know, it’s like boiling the frog slowly right. Is that our future and I don’t know where you stand on the inflation deflation debate or being you know, maybe I did years ago but don’t know recently. Your thoughts.
Jim Puplava 22:42
You know, right now you still have a disinflationary force, and that’s coming through technology or what I call the Amazon effect. And you also have Jason the fact that even though the Fed created a lot of this money by buying bonds, a lot of it stayed on the balance sheet. Banks holding that money with the Fed. So you have not seen the kind of credit creation that we had leading up to the housing bubble that was driven by, you know, heavy mortgage debt. But I think some point in the next decade, and it’s inevitable at this point, because you have 70% of the government’s budget is Social Security, Medicare and interest on the debt, which leaves only 30% for defense and discretionary spending. Well, that’s on automatic pilot. And if you look at the Congressional Budget Office for 2019, the government’s fiscal year, which will begin in October this year, they’re already projecting a trillion dollar deficit.
Jason Hartman 23:41
These numbers are insane.
Jim Puplava 23:44
They’re crazy. And that number could get bigger because they got this two year budget deal. That’s going to increase spending by 300 billion. Now they’re talking about infrastructure spending. And so you add that to the fact of 10,000 baby boomers retiring every single day. What is that doing? It’s putting more strain on medicare and social security, that is going to escalate and that is going to increase. You add that to interest on the debt. I mean, you know, Obama was one of the luckiest presidents because he doubled the national debt from 10 to 20 trillion. But every single year, Jason, the interest that the government paid out on the debt actually went down. So his last year in office, the government spent $20 billion less in interest expense at 430 billion, that one they did in 2008, when the interest on the debt was 450. Now you have rising interest rates, and you have two factors that are kicking in.
Jason Hartman 24:50
So you’re saying what you’re saying now, hang on one second. You’re saying Obama got lucky simply because he was in a declining rate environment or was there more to it than that, but don’t
Jim Puplava 25:00
He was in a declining interest rate environment because I don’t think Trump will be as lucky. Yeah, that’s true. I agree. Yeah. Because you just take a look at the average interest rate, if it goes up 1%. You know, that’s $200 billion more in interest expense. So you know, it’s not gonna be too much further in the next couple of years. We’re gonna start seeing the government shell out six 700 billion a year in interest expense.
Jim Puplava 25:25
A
Jason Hartman 25:26
lot of money. It’s, it’s, you can’t write fiction this good, Jim. It’s just crazy. It’s just these it’s just, it’s nuts. But the question is, do people have said this for a long time? These kinds of things, right. I mean, I remember I had Howard Ruff, I believe he passed away, but you know, he’s been on my show. You know, there have been a lot of these kind of like doom and gloom ish predictions for decades now. And they just haven’t come through because they can keep kicking the can down the road. And it never seems like to us another saying the chickens come home to roost. You know, it’s like, when’s that gonna happen? Or is it ever going to get? Maybe they won’t be we can play this game for the next hundred 200 years? I don’t
Jim Puplava 26:11
know, I think it’s somewhere around the next decade. Because, you know, if you take a look at our debt levels compared to GDP, we still have the best looking house in the bad neighborhood. Yeah, right. Right. So we’ve got further to go on this. I mean, just look at Japan. I mean, take a look at their debt levels. Look how long they’ve been able to get away with this. So I still think it’s probably, you know, maybe within the next 10 years, because at that point, it will you start getting into trillion trillion and a half $2 trillion deficits. You know, I’d like to see what they’re going to do in the next downturn. Because if we’re at a trillion dollars next year, with the economy, growing with unemployment, at the lowest level, what does that deficit look like? When we actually get into a recession when people lose their jobs, revenues declined for government and expenditures with Medicaid and unemployment, and all those things go up, you know, we could be looking at one and a half $2 trillion deficit. Okay.
Jason Hartman 27:14
So what does this mean? Does it mean inflation? Is it print their way out of it? As usual? That’s always the answer is, it just blows my mind, Jim. Every time you see a g7 meeting a G 20. Meeting anybody meeting right? Davos? The answer is always increase the money supply. That’s the answer to every problem, right? Throw gasoline on the fire, you know. Now, granted, there’s a contraction going on right now. And, you know, we’ll see if they can manage that. So it’s a soft landing. Of course, the history isn’t good on that, as you say. Ultimately, it just seems like that’s the only business plan, right is to just increase the money supply
Jim Puplava 27:57
when you really start to see the inflation kick in You know, you heard about the Fed’s balance sheet going from 800 billion to four and a half trillion. But a lot of that didn’t get out through the banking system in the form of credit, it remained on the Fed’s balance sheet, when I think you see the full impact of an inflationary Fed is when the government says, you know, what, we’re gonna do an infrastructure program, we’re going to spend an extra $200 billion a year and the federal just come in and monetize the debt.
Jason Hartman 28:25
Right. And so that’s inflationary,
Jim Puplava 28:28
that will be inflationary government spending more money than actual production of goods and services. And it is being monetized. And you know, we really haven’t seen that yet. So that’s why I think when we look at this inflation is in our future. And you know, whether it will get to some kind of crisis, where it’s not being able to be funded in the government is forced into a straitjacket much like Great Britain. And, you know, whether we go the route of Argentina, you know, I think that’s, I don’t know, forget we’re gonna see that before something else happens in its place. Yeah, interesting stuff. Interesting stuff.
Jason Hartman 29:11
So what’s kind of the strategy like what do you think people should do? You know, are people want inflation? I mean, you know would mean like philosophically I hate inflation, but as an Jim Puplava in income producing real estate, I love it. Because inflation, you know, of course, it’s a good hedge. That’s the simplistic overview that everybody knows. But more importantly, inflation basically pays down the debt for you, you pay your debt back and cheaper dollars are really your tenants do. So it’s a something I call the double inflation arbitrage, which is, which is fantastic for real estate Jim Puplavas is like this hidden wealth creators inflation, but it’s pickpocketing everybody else. It’s not good for society. But it does appear to be really good for income property Jim Puplavas. Not
Jim Puplava 29:58
you know, I like Real Assets, whether it’s real estate, whether it’s, you know, things like precious metals or quite honestly stocks and I think we’re in this period right now where stocks are the advantaged investment. And we’ve seen it, you know, since this economic recovery, and I think right now is we’re just about ready to go into what I call the final sequence of a topping process we’ve seen, the bond market is already peaked. And stocks are still going full head of steam, but there’s something we’re watching very closely, we’re watching the dollar, which has been declining since January of 2017. And if you look at the summer, going back to June and July last year, you saw oil start to take off, you saw base metals start to take off and you’re seeing commodity related stocks start to take off. What we haven’t seen yet is the real breakout of what I call the commodity currency. He’s Australia, Brazil, Canada, but they’re rising. And so there’s a subtle shift here. But the leaders in this market are still what they were leading up to this last correction. consumer discretionary stocks, technology, stocks, industrial stocks, they’re still in a leadership role, while we’re watching is for that switch to start suddenly taking place where you start seeing energies and commodities start moving into a position of leadership, which is what you do towards the end of the business cycle we saw to happen in 1999 and 2000. We saw it happen again in 2007, and 2008. So that’s what we’re watching right now. And I think the most dangerous thing that your listeners could be doing is this passive bubble and what I call index funds or it’s mindless investing, you take 90% of the trading on the exchanges. Algo traders in index funds. Well You know, those index fund Jim Puplavas got a taste of what it’s going to be like in the next downturn in the correction that we just went through
Jason Hartman 32:09
talking about a downturn. Do you think we’re gonna have another sort of Great Recession, if you will, or a big downturn, or will just be the typical run of the mill, you know, recession that happens on the business cycle? And, you know, depending on what you think about that question, what would be the cause? Is it simple contraction of money supply is that there’s so many factors, you
Jim Puplava 32:33
know, I think eventually the Fed is going to raise interest rates. So one of the things that we think is an anomaly right now is you have massive stimulus coming in at the end of the business cycle, you typically see it at the beginning. At the same time, you’ve got a contractionary monetary cycle. They work best when they work in unison. So I think this next downturn is going to be Jason relatively mild. And the reason I say that is they just increased in the budget $300 billion of additional spending on the military, social programs, you name it, they’re spending it. And then what they’re going to do is they’re going to put in place 1,000,000,000,002 trillion and a half in infrastructure spending. Well, you and I know the way Washington works with bureaucracy, you know, environmental laws, it takes forever to get something in place. That is shovel ready. You know, they’re going to pass this, but it’ll take a couple of years to implement. So, you know, when we get into the recession, coming out of that recession, you’re going to see massive government fiscal stimulus coming in the form of infrastructure spending, that will carry us through into the next cycle, which will be more inflationary than the previous one.
Jason Hartman 33:48
Now, you know, it begs the question, how does this affect the largest demographic cohort in American history that is going to be impacting the economy in a huge way. Shortly and that’s the millennial generation. Of course, the too much talked about and way too much catered to generation of millennials out there 80 million or so strong. They’ve got incredible student loan debt, which talk about a scam that’s just an epic scam, the whole call it I call it the college government industrial debt complex. I mean, what a scam that is, you know, tuition prices and so forth. They’re in a somewhat anemic long term overall economy, I believe, but they are going to eventually inherit some money. But then you look at these stats about how, you know, huge swaths of the American population have less than $1,000 in their savings account and nothing in an IRA or save for any kind of retirement. and combine that with the social security problems coming our way. And it just really is all these factors coalesce it just really makes you wonder how things are going to work. out, especially for the millennials. And you know what that mean? The baby boomers changed everything, of course, and they’re slightly smaller than the millennials, but hugely different set of circumstances.
Jim Puplava 35:11
I think you have the makings of a very disenchanted generation. And the scary thing is, could it be revolutionary? Because a lot of these people, as you just mentioned, are out of college with huge debt, with degrees that are not appropriate for getting a job in today’s high tech society. And we’ve interviewed a couple people that are starting the equivalent of what I call apprenticeship programs, where you don’t go to college you go through and I heard that interview. That was
Jason Hartman 35:43
great. Yeah,
Jim Puplava 35:44
yeah. Good idea. Yeah. And I think that is going to be more if the millennials are saved. It’ll be through programs like that. Because you know, the typical millennial that goes to college comes out with the degree that you know, you can’t get anything decent paying job or at the school. I’ll set. And the other thing is this entitlement mentality is harming their basic job skills. I know a consultant who works with corporations to handle millennials, because, you know, he was telling me about one gentleman that basically decided not to come into work for a couple days and didn’t bother to call. So it’s, I don’t know, it’s gonna be a big wake up call. I think for many of these,
Jason Hartman 36:26
it’s interesting. I mean, we can look at all this stuff. And in the context of history, certainly, it’s it’s hard to argue with us. And, you know, I have another theory I’ve been working on Jim. And it’s that the millennial generation, in a lot of ways they have a better life, because of the sharing economy because of technology. I mean, things are cheaper and dramatically better. I did not grow up with an iPhone. Okay, these millennials grew up with iPhones in their back pocket, right. You know, if I could have a television Set and the access to information that they had. That just was second nature to them and totally, you know, they felt entitled to unexpected. I could have that when I was a kid, it would have been like my dream come true to be able to watch TV in the car or watch videos in the car, his mom was taking me around town or something, right? So in some ways, things are dramatically better because of technology. Right? And the access to information and resources through the sharing economy, rides with Uber and Lyft, etc, etc. Bicycles on demand, all these kinds of things. But you wonder what’s going to win in the in this war and I’m looking at it as a war between bad government fiscal central bank policy right. And technology. on the good side, right technology is a deflationary force. But everything the government and the central banks do is an inflationary force. And I’m not saying government singular, it’s government’s plural. Just don’t All around the world. So how do we know who’s gonna win this war between the two? I think that really determines the future. And just to give you a little more to chew on here, the theory I’m working on is that the millennials, even though they have a better life, in a lot of these ways, with technology and such,
Jim Puplava 38:18
they are
Jason Hartman 38:19
entering the what I call the Jim Puplava class, the way my generation Gen X did. They’re not buying their first home at age 2426. Very often, they’re still living with parents right now they are entering the housing market, but as a percentage overall, it’s much lower than before. They don’t have those stable corporate jobs that are paying high wages that prior generations had. You know that with all this asset inflation we’ve had, I don’t know that they’re really able to enter the Jim Puplava class. And if you project that out 10 or 15 years, that puts them very far behind as Did that student loan debt and all the other issues? It’s hard to figure out where it’s going with
Jim Puplava 39:05
that? Well, you know, the thing about technology, you look at the millennial lifestyle might be less than, let’s say, the boomer lifestyle, you know that they’re content to take Uber instead of owning a car, right? They may be content to own a small apartment in the city, versus a house in the suburbs. Right. And so it’s a different in terms of human needs and wants, from material possessions. It’s a different type of you know, the iPhone is probably more important to them in earbuds, then, you know, having nice clothes or a nice car to drive. The other thing too is there’s going to be inheriting some money. Yeah, right. So it’ll be interesting. Now we have a Prentice ships in our organization. We have three millennials a workforce. And Jason I can tell you you know, a lot of it is his upbringing because these people are an ambitious They’re hard working. Yeah. And it’s almost like an anathema to the generation model that people think of. So it’s going to be interesting, but I’ll tell you, I think you’re gonna see a lot more convulsions, a lot more volatility in the next decade, because we’re now reaching critical mass when it comes to debt. You know, we’re going to be at 21 trillion. And starting next year, we’re back $2 trillion deficits. So that number can climb very quickly. And it’s going to be interesting because I think it’s going to put a cramp in terms of the government’s ability to do things that it wants to do. And the only alternative it does want to accomplish or spend money. It’ll have to be monetized and printed because there simply won’t be the tax revenues there to support it.
Jason Hartman 40:50
Yeah, we we shall see how it all goes down. Jim, give out your website and tell people where they can find
Jim Puplava 40:56
you. They can come to our website. It’s financial sense. That’s sense with S e m s. e. That’s financial sense.com.
Jason Hartman 41:06
Good stuff. Good stuff. Any closing thought you want people to hold on to before you go?
Jim Puplava 41:10
We haven’t seen the final leg of this upturn in the market yet, believe it or not, we’ve got tax rates and tax stimulus kicking in on top of that government spending and stimulus. So it’s only gonna end when the Fed does what it always does, which is crashed the airplane. Yeah.
Jason Hartman 41:28
It would be funny if it weren’t so sad. And so I don’t mean to be laughing. But you know, there’s some there’s definitely some truth to that. Jim Plaza. Thank you so much for joining us. Appreciate it.
Jim Puplava 41:38
You’re welcome. And thanks for having me on your program.
Jason Hartman 41:42
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