In this Flashback Friday episode, Jason Hartman welcomes Alasdair MacLeod, contributing author for GoldMoney.com. Alasdair explains what a Nero influence is and gives his thoughts on how governments worldwide could defer their imminent fall. They also discuss the decline of the European government and how “governments are eating their children.”
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Jason Hartman 0:09
Hey, this is Jason Hartman, thank you so much for joining me. Do you know what day it is? Yes, it is flashback Friday, where you hear the best of the creating wealth show and you hear some good prior episodes, some good review. Remember, we’ve got almost 500 episodes out. And you know what? iTunes doesn’t even hold them all if you’re an iTunes listener, if you are listening on Stitcher, thank you for joining us. So we want to bring you some good review stuff. Now. What’s interesting about flashback Friday, it’s a little scary for me. I got to be very, very candid with you on that. Because you the listener, you get the chance to hold my feet to the fire. Did I make any predictions? Was I right? Was I wrong? I’ve been right about a lot of things, but I’ve been wrong about a few. So you can give me a hard time about that if you wish. But it’s flashback Friday, and we will give you the uncensored Best of the creating wealth show with a prior episode. So let’s dive in. Here we go. Remember, this is not current. It’s flashback Friday.
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 investor, lender, developer, and entrepreneur whose own 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 investors.
Jason Hartman 2:12
This is your host, Jason Hartman, thank you so much for joining us today. Today, we’ve got an interview where we’re going to talk about a little more on gold, we’ve got a guest that’s going to talk about that. And we’ve got one of our investment counselors, Sarah here with me. How you doing, Sarah?
Hey, Jason, thanks for having me.
Jason Hartman 2:27
Well, my pleasure. So wanted to have you on today just in in terms of the intro part, to kind of give the listeners and clients an update on what’s going on out there. And I thought maybe we’d start by talking about a few properties. Inventory is becoming a challenge. Again, you know, this is constantly a moving target. Sometimes there’s lots of inventory. Well, not that not in the last year, there’s not too much. But we’ve had a few times this year where we’ve had a decent amount of inventory. And now it feels like it’s getting a little bit skinny, again, in terms of selection. But we do have a few good properties and wanted to talk about those and just kind of generally get the feel of what’s going on with you. And in the client perspective, Sara. So that’s why I wanted you to come on today. And tell us about some of these properties, maybe?
Yeah, well, the inventory is definitely shifting at any given time, we get a you know, a handful of great properties and some of the different markets. And just yesterday, actually, I should say Friday, we got some new construction duplexes in Indianapolis, which we’re really excited about. As of right now, we have access to about six, and we’ve already put a couple under contract. So it’s sort of a first come first serve basis, but they’re they’re really great. You know, a lot of the investors are really liking the new construction in terms of not having a lot of maintenance, you know, I bought brand new construction back in 2007. And literally, I’ve put about $250 into that property in five years, maybe I’m lucky. So that’s a huge plus for new construction. But this one, if you want me to give you a rundown of the numbers, its purchase price is 175,000. And the cost per square foot on this is just $62 per square foot.
Jason Hartman 4:04
And I should just point out again, that’s new construction. And then, you know, look at the RV ratio here. 175. As Sara mentioned, that’s the price. But the projected rent here is 2100 per month. Now are these two these Sarah come pre rented by the builder?
Uhm, the builder is leasing them up. I don’t know that they will be leased prior to close. They don’t do any kind of a guarantee, so to say. But we’ve done some of this single family and they are leasing up. Some of them are leasing up prior to close. So I don’t think there was any issue with the rental market in Indianapolis. It’s one of those sort of linear boring markets in terms of appreciation, but the rental market surprisingly has always been pretty strong. And you know, with the exception of maybe the winter months, but that’s in any market. So you know these again, they’re new construction. And what I like about these is they’re scheduled to be complete towards the end of December which you know, knowing builders could even get pushed out a little bit longer. But that puts you right into when the rental market picks up again, which is January always picks up after the holidays. So for somebody that maybe is already in escrow on a couple of deals, and they’re looking for their next buy, they this may be, you know, great strategy for somebody to pick up their next property.
Jason Hartman 5:21
Remember, you’re listening to Flashback Friday. Our new episodes are published every Monday and Wednesday. Now with this one, you know, with these brand new duplexes, $62 a square foot new, which is pretty darn amazing. And the cashflow here is projected at $770 per month on a $45,000 total investment, total cost and about $45,000. So look at your cash on cash return. Now everybody, I hope you’re sitting down because this one’s going to blow your mind. Okay, and this cash on cash return is nothing short of amazing. And remember, I love that very, very simple cash on cash return metric. Because if the property goes down in value, if it becomes worth $1, the day after you buy it, as long as you achieve the income and keep the expenses at the at the performing expenses, you will get this cash on cash return of get this 21%. 21% annually cash on cash. Amazing. That doesn’t include tax benefits. It just doesn’t include anything, it’s just based on the income your money is generating. Now, many of our listeners, including yours truly, as well have been interested in hard money lending or private lending. And I’ve been doing a lot of that lately. And I really like it. I like the simplicity of it. But the best I’ve ever gotten on a hard money loan is 13.25%. So here, even if you manage it, one third worse than projected, you’re going to get about 13% cash on cash. So that’s the comparison to your hard money loan. And it also gives you some tax benefits as well. So all of you can really see why I like actually owning the property better than doing the hard money loans for the private lending. I think the private lending and hard money loans, it’s my second favorite, but owning the property is far and away the best. Now, the other thing Sarah, do you want to mention the overall return on investment here
Overall return on investment projected at 40%
Jason Hartman 7:34
40% annually. So when you put everything into the equation with some conservative assumptions, you know, including vacancy rate, management fees, maintenance fees, etc. You know, you’re looking at a overall return there potentially a 40% annually. And you know what I always say, Sarah, if it doesn’t go as well as projected, if it only goes half as well, and you make 20% on your money, I bet you’ll be happy as a clam. And clams are really happy.
Well, and just one more thing I wanted to add in on the on this particular new construction duplex is that each side is four bedroom, two and a half bath and the total square footage is 2800. So that’s 1400 square feet per side. And it’s also in a really great area. So your attendant classes, you know, probably going to be pretty nice. I mean, usually duplexes are not that many bedrooms and not that big, you know, per side. So it’s a nice, it’s a nice property.
Jason Hartman 8:32
Yeah. And you know, I want to mention something on the area comment you just made. Generally speaking, we like houses in sort of suburban kind of yuppie or semi yuppie, not really, really yuppie, that would be too expensive. And the cash flow wouldn’t make sense type areas. And you know, yuppie, of course, is that old, I think it came out of the 80s, that young, urban professional, right, and those kind of areas that are that are nice areas, their areas, pretty much anybody listening would be willing to live in, they’re not really bad areas, where, you know, in these really bad areas, the cash flow can look good, but, you know, the management becomes a real nightmare. And, you know, I kind of love to pick on Detroit. So I just want to mention something on Detroit here because I saw an article about it the other day, and this is from Newser, and it says here, and Sarah, I haven’t talked to you about this, but it’s mind boggling, right? Detroit’s vacant fields are dumping grounds for the dead. This is mind boggling, right? It says, of all the grim stories coming out of Detroit, this one from AP news might be the bleakest of all, quote, abandoned and neglected parts of the city are quickly becoming dumping grounds for the dead. At least a dozen bodies in 12 months time writes Cory Williams, and authorities acknowledge that there’s little they can do. The problem is that with vast swaths of the city now vacant, and few people have reason to venture into any of these areas, including the police. You can shoot a person, dump the body. And it just goes unsolved because of a delay in finding the corpse as one city police officer. In fact, some of the victims are believed to have been killed elsewhere and dumped in Detroit, just for that reason. I mean, that is really we shouldn’t be laughing. That’s a really sad story. But it’s, you almost have to laugh because it’s mind boggling. I mean, can you imagine a place where the economic devastation is so significant? And that’s really, some parts of California, I think, are going to be like that in the future. Not all parts, but some parts. And I mean, that’s what happens when you get these unions and the big government and all those social programs, they just ruin it. And Detroit is kind of the poster child for that. It’s it’s pretty mind boggling. It really is. But we like the areas that are nicer. You know, we got people all the time trying to pitch us on selling $25,000 homes in Detroit. And that’s why I have to mention that. Okay, we turn those deals down constantly. Right. Sarah? Do you have any comments on that?
Yeah, I mean, we we get emails and calls all the time offering the lower price point properties, and we have sort of dipped into some of the older properties and the older construction, we try and stay in decent areas, though, because there are, you know, there are some all cash buyers that you know, only have a certain amount to work with, we also have investors purchasing with their IRA. And of course, financing an IRA is very challenging. And so some of the, you know, 40 $50,000 deals are still attractive, but I mean, anything under 30,000, I would just say,
Jason Hartman 11:41
You get down to some of those things, and they just become messes, they just, they just don’t work in real life. They look good on paper. But I mean,
I always say, you know, in talking with different investors about the lower price point properties, it’s the question really is, you know, do you want to pay now or do you want to pay later, if you buy a nicer property, you know, newer, nicer property in a good area, your return is going to go down a little bit, you know, your return will suffer or projected return, I should say, but you’re going to have less maintenance, and it’s going to be more of a passive deal. When you get into the older stuff. At the lower price point, you may have an excellent, you know, cash on cash projection, but you know, you’re going to be paying into it little by little, you know, every year. So it’s just the question is, do you want to pay now? Or do you want to pay later?
Jason Hartman 12:26
Yeah, yeah, good point. Good point. Well, and when we say nicer, and more expensive, you know, we’re talking about properties between 70 and $120,000. It’s not like they’re that expensive, right? Well, you know, here’s, here’s another one. Let’s, let’s talk about this one. Let’s jump on the jet. And let’s go over to Memphis, Tennessee, this market has been, again, surprisingly good to us. And our clients, and we have for a long time, didn’t want to do Memphis, we really kind of objected to it. But we finally came around. And you know, a few of our clients who are probably listening are the ones who brought us around. So that’s why we love you love it when you participate in the show and share your experiences with us because we learn a lot from all of you, all of you, listeners and clients. But this one, let’s just look at the performance here. We’ve got an ROI return on investment projected at 29%. What else would you like people to know about this one, Sarah?
Well, I mean, this is a perfect example of the you know, older, more established property at a lower price point. It’s 56,900 in purchase price. It’s about 1300 square feet, built in 1964. And it’s a three bedroom, two bath. But looking at the picture, it’s got a great little curb appeal. I mean, it’s just, you know, you can tell it’s just an older construction deal. And in talking with the seller, you know, it’s in a good area, he would probably rate this as a, like a B area. And you know, not a high crime rate area or anything like that. But estimated rent is 850 a month, and cash on cash is projected at 16%.
Jason Hartman 13:56
Yeah, you know, this property looking at the picture for the benefit of the listeners, it’s a tree lined Street. It’s got a nice big lawn. It’s nicely manicured, you know, when you start seeing a lot of bars on Windows and fences, those are the areas to avoid. And that, by the way, is why I don’t like a lot of these foreign countries, folks that I know some of my competitors are talking about. And I’ve been there and I’ve looked and I just I don’t think it works that well than the 64 countries. And I’ve looked at real estate in all of them. You know, I’ve gone around with agents there and just doesn’t work. I just, the American real estate so far, I still like it the best. So this one, 56900 and it’ll, it’ll cost about 18,000 to get into. $44 per square foot and your cash flow here is almost $3,000 per year on a $18,000 investment. So how does that make the cash on cash return look, Sara.
Right. I mean, it looks great.
Jason Hartman 14:53
Oh, I was kind of going for a number there.
Oh, well I already said the number 16% cash on cash. That was a setup.
Jason Hartman 15:02
Okay. Sorry about that.
Jason knows how ill-prepared I am for these interviews.
Jason Hartman 15:08
By the way, folks, we do not rehearse as these are totally spontaneous. I just happen to be on the phone with Sarah. And I said, you know, I’ve been wanting to get you on the show again. And she says, Okay, well, let’s do it now. So, there we go. That’s our, that’s our amount of rehearsal. Okay, good. So are we done talking about this, woman?
Alasdair MacLeod 15:25
Yeah, I mean, again, this is a great all-cash buy or IRA deal at this price point. But also, we do have lenders that can finance these. So if you’re somebody that maybe is working on your very first deal, and you want to stay under $20,000 for your initial cash invested, this is a great starting point.
Jason Hartman 15:43
Just a reminder, you’re listening to flashback Friday, our new episodes are published every Monday and every Wednesday. Good stuff. Okay. Now, before we talk about the next property, I wanted to talk a little bit about business models. You know, folks in my financial freedom report newsletter, I published an article a couple about three issues ago for those of you who subscribed, and that article was about different business models in our business. Okay. So first of all, most of you know that what we do is pretty darn unique. But there are a few other people out there that do similar things to what we do. And many of them though, and many of them have podcasts that are quite popular, by the way. And I, I know, you may have stumbled across them at one point or another. But they don’t have the same business model we have seen my background in over 20 years, is in the real estate business. Now, I used to own a traditional real estate company that I sold in 2005 to Coldwell Banker. And that business is a pretty traditional sort of service oriented business. And that’s my background, when I was in college, I became a real estate agent, and started selling properties, just like any other realtor that you probably know. And that’s been my background, I didn’t go into this business from the perspective of being an internet marketer, or a radio show host or anything like that. I am in this business as a real estate person. That is my perspective on it, even though I use media and so forth in that business. Now, what’s interesting about that, and why I bring that up is because I was talking with one of our local market specialists the other day, who happened to be on someone else’s podcast. And you know, I asked him about it. And that was about a year ago that he was originally on their show. And I said, how’s it going? Do you do any business with them? And he said, Well, no, we haven’t done any business with them yet. And I said, Gosh, you were on your on over a year ago, and not a single referral. And he says, well, Jason, you know, the difference is, they’re not really in the real estate business. They don’t have investment counselors, like your company has. They don’t provide any sort of follow up service or anything, they just basically do a show. And it’s a different business model. I’m not saying that’s bad. I’m just saying it’s different.
And Jason, you know, let me just comment there. Because that begs the question, you know, are they investing in the same properties that they’re hyping up and talking about on their show? You know, do they have experience working with investors that are, you know, investing in these markets and the ins and outs of the little details, you know, and analyzing properties and making sure you know, that the maintenance is projected, and you know, all of these items are itemized on the Performa?
Jason Hartman 18:34
I, the answer is I hugely doubt it 99% chance the answer to all those questions is, No, they don’t. Many of these shows, you can just pay a fee and be interviewed on the show. We don’t charge our guests to be on our show, we put our guests on the show because we want them to be on the show because we think their, their content is valuable. So we’re not an advertising company. We’re not an advertising portal. We are real estate investors, I own properties all over the country. I’ve been involved personally in thousands of real estate transactions. And this is what we do we just happen to be talking about it on the show. And and so it’s really a different business model. And in Sarah, what kind of inspired having you on the show today is that you were talking about one of our sort of competitors, and how one of our clients bought a property through them in the past and then came to us and and couldn’t get any help couldn’t get any service after the transaction had had closed and it was about a year down the road. We offer free lifetime rental coordination. We will help you years and years after the fact. Okay, as long as we’re around. If you have an issue with your property, a lot of times even if you buy the property from somebody else, we will help you out with it. And Sarah, you do that every single day of your career. So You know, I thought I’d ask you to comment on that.
Yeah, I mean, just the little things that come up, you know, with property management, and more specifically communication, you know, everybody’s always really excited and communicating well, when they’re trying to get the sale, or they’re trying to get the business and then you know, years go by, and sometimes they forget the value in that, and, you know, don’t return calls quickly, or, a lot of times, you know, investors get a little bit nervous about maybe a situation that comes up with their property. And meanwhile, the property management, they’re working on it, and everything’s fine, but they’re not communicating that to the investor. And so, you know, I’m happy to, you know, jump in and make sure that the investors are getting updates, we do that all the time. So you know, another thing that, you know, happens is sometimes property managers, you know, they go out of business, or maybe they get too busy, and they take on too many clients. And so, you know, if we ever have to go in and identify a new property manager, that’s just part of what we do. So, and again, you know, Jason and I, and our other investment counselors have properties in a lot of these markets. And so sometimes we have to do it for ourselves, and then, you know, that is a benefit to all of our investors, or vice versa, sometimes, our investors bring, you know, great new team members to the network, and then we can then, you know, share it out with the rest of our group. So, it’s just nice to be a part of a group or you have kind of, you know, somebody to check in with when you have questions,
Jason Hartman 21:25
Our referral network is, is helping people buy real estate every single day, that is what we do. It’s not a radio show. We are a real estate company in the in the background. That’s, that is what we do, we do this, and we live it. And it’s amazing, because I remember how, you know, I was very successful in the traditional real estate business when I was when I was 24 years old, I was earning almost $400,000 a year, and all of our listeners can adjust that for inflation, by the way, because you know, all about inflation. And you know, it really makes a difference. Because, you know, what my clients had always said to me, Sarah, you know, I was one of the top agents in the REMAX system for many, many years. And my clients always said, I cannot believe your level of follow up how you keep in touch with us, you know, we bought this this property from you eight years ago, 12 years ago, and you’re still in touch with us. And and, you know, I was just kind of taught that it’s all about repeat business. And that, I think, is a major, major distinction between us and the other people you might come in contact with out there.
You know, it’s funny, you say that, because it really is about relationships. And you know, just a real quick story. Last week, I had a gal call in and she says, Hey, I, you know, I’d like some more information about, you know, what you do, my friend referred me. And I said, Okay, well, great, nice, nice to hear from you. Thanks for the call, you know, who’s your friend. And she goes, you know, what, I’m a real estate agent, can you just cut the small talk and just tell me if you can help me. And it was literally like that kind of a call. I you know, she wanted to buy some sell, sell one of her clients on, you know, California property. And she had a license but wasn’t really involved in the business. And she wanted to outsource that, and you know, get paid on the deal. And, you know, I really wanted to explain to her, like, you know, what we did and why it’s probably not in the best interest for her to have our clients buy in California right now. But she just like, didn’t give me the end, she was just so short. And I’m thinking, gosh, you know, that if she, she could have had a great like, you know, long term client, and we do you know, for everybody listening, we do work with real estate agents, you know. If you’re in a market where your properties just don’t make sense, and you have somebody looking to invest, just, you know, call in or email us, and we do work with agents and helping their clients find great properties.
Jason Hartman 23:49
Yeah, absolutely. Yep, we definitely do. We’re an open network. So we, we help agents do that for their clients and we pay them referral fees. And so you know, it’s just a win win thing all the way down the line. But hey, let’s talk about this last property real quick. And then get to our guest today.
That would be the other new construction deal in Indy?
Jason Hartman 24:08
Yep. And you know, the reason I kind of want to talk about this one is because I just bought one of these with a client of ours, didn’t I? Yeah. So AJ and Sandy, hello out there. How are you? We just went in on one of these deals together, and I actually am investing with them. So talk about this one and give the listeners the details on it.
Well, this is another new construction, single-family home in Indianapolis. And you know what I like about this one as opposed to the duplexes it’s a much smaller cash investment. So if you know $50,000 is a bit much for you to get started. You know, this one is right around $20,000 initial cash invested with 20% down and the purchase price is 1049. It’s a nice single family home it’s about 1600 square feet. Cost per square foot is $64 and estimated rent is 1150 a month. So cash on cash projection for this one is also 20%.
Jason Hartman 25:02
20%. That’s just amazing. Yeah. Now, one of the things I also want to mention is, you know, our two I’d say, you know, maybe I don’t know if you agree with me or not, but I’d say our two best cash flow markets right at the moment, are St. Louis and Indianapolis. Would you agree with that, by the way?
Alasdair MacLeod 25:17
Yeah. St. Louis, Indianapolis. And I also think, you know, Memphis is is coming around on some of their like B and C class properties.
Jason Hartman 25:25
Yeah. In other words being really high on the cash flow side of the equation
Jason Hartman 25:29
Yeah. And maybe we should just mention, you know, St. Louis for a moment, because we haven’t talked too much about it lately. And some of the listeners might be wondering, why not? Well, I guess it’s kind of nice that, you know, your company has the ability to do this, like, because we do so much volume the way Apple computer does, where we, we sort of put our supplier out of business for a little while, didn’t we?
We did, and I actually got an email from a client today. And hopefully, he’s listening, you know, or will be listening to this podcast. But, you know, some of our investors purchased these, you know, duplexes in St. Louis. And when we first started, they were already rehabbed, ready to go, Well, what happened was, we had such a high demand because of the high cash flow, that you know, we contracted all the ones that were rehabbed, and we started contracting deals prior to the renovation being completed. Now, of course, if you do that, you don’t close until the rehabs done, and you have the right to inspection and all of that. But what that what happened was we got kind of they got backlogged. So, you know, they were playing the catch up game. And so I got an email from a client who, you know, was a referral, I believe his brother, you know, also purchased with us in St. Louis. But you know, just saying, Hey, you know, the, the closing got postponed, they said, they’re almost finished with the rehab, you know, can you just kind of check in with them and see how things are going. And again, that’s part of what we do is just kind of stay with them through the, through the process. And, you know, he actually responded to my Annapolis duplex email saying he wants to get going on another deal, and needs to wrap up the first deal. So, you know, this is just kind of something that happened in St. Louis. And so maybe some of you guys are noticing that we’re not getting a lot of new inventory there. Because we don’t want to over promise and under deliver want to wrap up those deals, we want to make sure all the investors that are buying there now are happy. And then, you know, once everything is caught up, you will probably get some new inventory there again.
Jason Hartman 27:20
Yep, this is the important thing to understand that all of this, this whole game of real estate investing is so dynamic, it’s so fluid, it’s always changing. And you know, as soon as St. Louis, for example, starts to slow down, and they get behind, and their rehabs are moving too slowly, because they’ve got too many transactions in the pipeline, we stop referring there, because you know, it’ll be too long wait for our clients to close. And that’s exactly what we’re saying. So, you know, St. Louis is fine. We still like the market, but we just can’t recommend it at this very moment. Because we’re waiting to play the catch up game with our supplier, the same way you wait for the the factory in China to manufacture all those iPhones that you want to buy, right. So they have a certain launch date. And that’s what we’re always doing. We’re always monitoring this. And the same thing happens with property management, and with rental expectations, and so forth. So say for example, you have a market where it’s renting really well. And then three months or six months later, we start to hear from clients. Oh, you know what, my house is vacant a little bit longer, my apartment buildings not leasing up quite as quickly as it used to, then we stop recommending that market. You know, we investigate it, we start, you know, we see what’s going on. And if it’s a systemic issue that that rental market may be softening, for example, we stop referring that market and we favor another market instead. This is the beauty for you as our clients of being area agnostic. And that’s what we are. We’re area agnostic. Okay, so anything in closing, Sara
You know, we didn’t mention our upcoming boot camp in Atlanta. So I just wanted to say I’m really looking forward to that. I missed the one in St. Louis, which I was really bummed about. But I’ve been to Atlanta before. I love it there. I own property there. So I’m really excited for that boot camp. And for anybody that’s going to be there. We’re going to be touring properties the next day. So it’s always great to put a face with a name. And so we’d love the opportunity to meet you guys in person. And if you can make it happen. We would love to see you the last weekend of September. All the details are on the website. And we’re happy to take calls. If you have any questions call or email us and we hope to see you there.
Jason Hartman 29:34
Yeah, so any of our investment counselors can help you with questions on the upcoming boot camp and tour in Atlanta. I just want to briefly tell you some of the stuff we cover the creating wealth boot camp is our most fundamental program. We’ve had thousands of people come through that over the years, and you’re going to learn nine basic things. Okay, there’s much more to it than this because it’s a full day from about nine in the morning till 6pm and it’s almost all of it is given by me. I teach that one myself unlike meet the Masters, where we have guest speakers. And by the way, we got something to mention to you about masters in just a moment. But the nine things, the nine more most fundamental things you’ll learn there is how to move from active to passive income as quickly as possible. We’ll talk about of course, my fundamental thing, the 10 commandments of successful investing, how to understand true ROI, how to read performance, how to vet them and vet the properties, how to pick the best markets, how inflation benefits us as investors, how to get tax free money out of your investment over the course of your investing lifetime, how to maximize returns and minimize risk. At the same time, we’ll talk about the three dimensions of real estate, and we’ll talk about our complete solution for real estate investors. Now, before you go, Sarah, I just want to mention it. And that is Meet the Masters. You know, for many, many years now, I have put on these meet the masters of income property investing events, and we’ve had lots and lots of eucom. And we’re still going to do it. But we are making a little bit of a change. And we been talking about this for a few months. And what we are planning to do is do masters only once a year. Now there’s a reason for this, okay. Number one is that we want to do more events in different cities, we’ve had some great success, holding the creating wealth boot camp, and a property tour the following day in our markets. And we want to get you guys out to our markets, we want to see you in places like St. Louis, Memphis, Atlanta, Dallas, and Phoenix. And so in, in the interest of doing that, we are thinking that we want to do maybe four or five events in other cities with a property tour combined per year, and then do masters once a year in January. So it’s kind of a new thing for us. And I hope you all like it, we’re happy to hear your feedback. And you know, if you want to change our mind, tell us you hate the idea. And you want masters twice a year, like we used to do every spring and fall. But that’s what we’re thinking of doing. And many of you have asked why haven’t they announced meet the Masters yet? It’s usually in October? Well, that’s why because we’ve been wrestling with this idea. And we want to do more events, in other cities in our markets and get you in the market actually looking at property. Sarah, any thoughts on that?
No, I think meet the masters in January’s a great idea. You know, everybody’s all into their goal setting after the new years. And what better way to start off the new year then to you know, make a plan of action to go with your goals. So I like the idea. Maybe we can squeeze in two if there’s a demand for it. But there seems to be a lot of demand for these on-location boot camps. And you know, for those of you that haven’t attended the one-day boot camp, you really should attend once a year there. It’s a great refresher course. You know, I think I do a Jason Hartman event, at least once a year, and I always pick up something new because the mark, different markets are always changing. The lending is always changing. You know, of course, there’s always a plan, you know, politics that Jason loves to bring into the mix. So, you know, it’s a great time. And it’s a great refresher course, for those of you that have already attended. You know, come join us again, and then learn about a market while you’re there.
Jason Hartman 33:25
Yeah. And so that’s the nice thing, you get to do two things at once you get to see a market, maybe visit a city that you haven’t been to before, and also get some great real estate education. So that’s fantastic. Okay, Sarah, Hey, thank you for joining me today. We always go so much longer than we think we are. But hopefully, we’re keeping it interesting for the listeners. Thanks for joining us, Sarah.
Okay, thanks for having me.
Jason Hartman 33:48
Be sure to call into the creating wealth show and get your real estate investing and economics questions answered by me personally, we’d love to have you call in. Share your experiences, ask your questions, and a lot of other people listening, have those very same questions. So be a participant in the show at 480-788-7823. That’s 480-788-7823 or anywhere in the world via Skype, Jason Hartman ROI that’s chasing Hartman ROI. For return on investment, be sure to call him the show. And we are going to enter all of the callers in a drawing for some nice prizes as well. So be sure to call into the show and I look forward to talking with you soon.
My pleasure to welcome Alistair McLeod to the show. He is a senior fellow contributing author and podcaster for gold money calm, and he heads up the finance and economics.org website. Today we’ll talk about monetary policy fiscal policy or as I say before we started taping monetary or fiscal calamity, as it were, and just kind of get into it and the outlook for the economy and what investors might want to do about it. Alistair joins us today from about 180 miles outside of London, England. So it’s in the evening, his time and welcome, Alistair, how are you?
Alasdair MacLeod 35:17
I’m very well, and it’s very nice to speak to Jason.
Jason Hartman 35:19
Well, my pleasure. So tell us about your thoughts. I’m sure you have many, especially being in Europe near the newest epicenter of financial crisis. It was it was over here three years ago. But it seems to be moving and morphing.
Alasdair MacLeod 35:35
Well, I didn’t think you came to me for good news, or at least I hope you didn’t. I mean, as we speak today, there was yet another meeting between France, Germany, Italy, Spain, in Rome, which came away with absolutely nothing. And, you know, there’s sort of they’ve agreed that there’s a, there’s got to be a growth package of 100 and 30 billion euros. But that was already pre agreed anyway. And the problem isn’t growth packages, the problem is that they’re all bust. And you know, that they’ve got to address that problem, not talk about why don’t we spend some money on infrastructure, which is they’re talking about, or they’re also talking about introducing a Tobin tax, you know, the transaction tax on bank transactions, which misia or lawned, President of France is is so keen on. But I mean, this is absolute rubbish. I mean, it’s fiddling while Rome burns. And I think that’s actually quite appropriate. It’s the it’s the Nero influence, if you like, sort of come back to haunt us 2000 years after his death.
Jason Hartman 36:41
That’s a good comparison, Allister. It really is maybe a more contemporary way to look at it. And, and it’s not that contemporary, but 100 years old about is rearranging the deck chairs on the Titanic. Every time our prestigious world leaders meet at any summit, the discussion is just it’s based around one thing, shall we, you know, when they say, well, will the ECB or the Fed be responsive? And what is the response? The responses always print more fake fiat money? That’s all they can do or introduce a new tax, either one is is going to either devalue the savings of virtually everybody, or decrease economic activity through taxation.
Alasdair MacLeod 37:25
Yeah, I agree with that entirely, Jason, but it’s it’s worse than you say, in the sense that they don’t have the tool of being able to just print money in the way in which the Fed or the Bank of England does in their quantitative easing is effectively banned as far as ECB is concerned. So what the ECB is now doing, I mean, they’ve they’ve taken all sorts of collateral to try and keep the banks afloat. They’re now lowering the quality of acid that’s that was announced today. They’re lowering the quality of assets accepted. They’re taking residential mortgage backed securities, do you remember them, four years ago?
Jason Hartman 38:02
Alasdair MacLeod 38:02
They’re taking securitized loans off the banks? I mean, this is this is just this is last ditch stuff.
Jason Hartman 38:10
We’ll explain that a little more, if you would, I’m not sure the listeners know what you’re referring to specifically?
Alasdair MacLeod 38:15
Well, basically, the ECB stands there ready to help solve banks in the Eurozone, where they have liquidity problems. And the way that works is quite simple. We will lend you some money in return for the deposit of some collateral which you will assign over to us. And that’s what the banks do, but basically, they’ve run out of collateral, or they’ve run out of good quality collateral. If you think that sovereign debt in the name Spain and Italy is good quality, Greece, good quality collateral. Anyway, they’re now digging down saying, well, we’ll take residential mortgage backed securities, I mean, what’s the Spanish rmbs going to be worth securitize loans on small companies and things like this? This is the end game for Europe, I’m afraid Jason and the reason that it’s hitting Europe rather than anyone else, is because the ECB is not able it is banned effectively by its constitution, from printing money in the way the Fed or the Bank of England can do, because the primary reason for printing money is to finance government spending. And at the same time, rescue the banks, in other words, when you get the banks of contracting balance sheets on their bank credit side, and that has to be replaced by new money. And this is why QE is is so favored by the central banks because it kills two birds with one stone, it finances the government and it rescues the banks. The ECB is not able to do this. So they have to find other means of trying to keep the banking system afloat.
Jason Hartman 39:56
It would seem that the Keynesians out there though Who set up the the you know, the the modern version of the the eurozone and the European Union would have allowed themselves that backdoor the way they do in virtually every other country, most ridiculously the United States.
Alasdair MacLeod 40:13
Well, the reason that they didn’t allow that was because rarely the ECB took over the role of the Bundesbank. The idea was that the Euro was going to be a properly run currency on Bundesbank lines. And remember that the Bundesbank was operating in an environment where the Germans have had their currency wiped out twice in the last hundred years. And the result is that sort of the result was that the Bundesbank ran a pretty tight monetary ship. The other thing that happened in Germany, which is unique, really to Germany, more or less unique to Germany, in Europe, and that is that they did not discourage savings. So the result of that is that savings, you had a savings driven economy rather than a consumption driven economy. And that’s a fundamental difference between Germany and the rest of the Eurozone. And the result is that you’ve got a very, very strong, successful German economy. Remember that it absorbed a bust, East Germany, when the Berlin Wall fell down, that was an enormous cost. But it’s been strong enough to bear that cost, absorb it, and go on to better things. In contrast, when the Euro was created, what happened was that the, the Mediterranean countries in particular, found that their cost of borrowing declined. In other words, they were they were dealing on the back of Germany’s credit. So what did they do? governments just said, What p let’s go and spend some, and that’s basically what’s happened. And now they’ve got themselves into the situation, where the creditors are saying, no more, we want our money back.
Jason Hartman 41:59
Wow. What a, what a mess. It’s really a structural system, though. That is prudent, it makes sense. But now nobody stopped spending, I guess. Nobody stopped pandering to buy votes with other people’s money. And and, you know, ultimately, it really brings back Margaret Thatcher, and her famous quote, the problem with socialism is eventually you run out of other people’s money.
Alasdair MacLeod 42:23
Yes. There, you’re another analysis, I’m afraid is absolutely right. And I have an enormous sympathy for the people who are caught in this. I mean, think of the people in Greece who have effectively, you know, I mean, they’ve been impoverished by this. They’ve been impoverished by their governments actions, the fact they don’t understand what has happened to them, and why it’s happened to them. doesn’t stop me feeling, if you like, an enormous amount of human sympathy for their plight, they’re having to queue up for food. Now, I know, this is a feature of a lot of America. But this is this is something which was never never get to happen in this sort of brave new Eurozone world. It’s come as a very nasty shock for those who haven’t been prepared for it.
Jason Hartman 43:09
Sure. It sure has. But you know, I just have to ask you about that, though. Alistair. I mean, haven’t the Greek citizens been the beneficiaries of it all these years? I mean, they probably didn’t really think that it would come home to roost as it has in such a such an ugly way. But you know, they have been retiring at young ages, and enjoying government largess and, you know, a very sort of laid back lifestyle. It’s not like the government has just completely stolen all of the money. They’ve just spent it.
Alasdair MacLeod 43:42
Well. Jason, that is true if you work for the government. It’s true if you work for one of the industries that are very closely allied to government like working on the rail or something that like that.
Jason Hartman 43:50
Isn’t it true if you’re a hairstylist and retiring at a young age, because you work with dangerous chemicals, speaking of hair dye and things like that? I mean, you know, I heard they get to retire at like 49?
Alasdair MacLeod 44:04
Well, no. I think I mean,
Jason Hartman 44:08
Is that a myth? Are you going to tell me that?
Alasdair MacLeod 44:10
I think I think that is that that’s a bit of a myth? I don’t know the details. But what tends to happen in these cases, is that a union which is close to government, manages for its workers to arrange a very good deal. And that’s been going on in the, in Greece for some considerable time
Jason Hartman 44:28
And in and in California, and in the United States in general, but especially California.
Alasdair MacLeod 44:34
Absolutely. Yes. So, you’ll be aware
Jason Hartman 44:36
The public employee unions are just, they destroyed the state.
Alasdair MacLeod 44:39
Absolutely. I didn’t like to suggest this. But think of California being twinned with Greece, you then you get a pretty good idea. Underneath it all, there are lots of very honest people just trying to make a living, trying to do their best to provide a service for people, and they’re getting screwed. And that to me, is the tragedy. The whole thing at the same, incidentally, is not just Greece, Italy, you find that even the lower middle classes are so frightened about losing what little money they have that, you know, they get in their cars and they drive over to the Ghana or they drive over to, you know, Austria or France. And they try and find some way to change, you know, sort of, if you like Italian denominated euros into something else, whether it’s a bank account or French denominated or Austrian denominated or whatever, because they are worried that their government is going to fail. And what they’re going to do is they’re going to endorse Italian issued euros into, you know, something that isn’t worth the euro. I mean, this is this, these fears are really quite frightening. And this is now going on in not only Greece. But Italy, which is extremely large Spain, which we’ve all heard about. And obviously Portugal, Ireland is perhaps less hysterical about it, while hysterical is the wrong word. These are genuine fears from you know, which which which are in the hearts and minds of individuals. So I do have enormous sympathy with them, because their governments have fouled up, and they are now paying the consequences. And in the case of Italy, I mean, Mr. Monty is trying to screw down the tax. I mean, a year ago, it was, you know, a nice yacht comes into Harbor, right, we’ll jump on board that and just make sure that it is not an Italian owner, we will go and pay someone in Liechtenstein to leak the details of bank account so that we can see whether we’ve got any Italians who are ferreting money away or
Jason Hartman 46:42
Or they just, it’s that’s really similar to what the Obama administration is doing. It’s got to be just, you know, encouraging people to expatriate from Italy. I mean, the government is basically attacking its own citizens.
Alasdair MacLeod 46:55
Exactly, exactly. And funnily enough, I’ve written a bit for the for for gold money, because I do weekly thing, and I described it as governments are now eating their own children. I don’t know if gold money will print it. But
Jason Hartman 47:09
Well, that’s really an appropriate way to say it.
Alasdair MacLeod 47:10
It’s an apt metaphor. And I mean, read what I’m trying to say, Jason, is that we, you know, we’ve watched the politicians meet time after time after time, and nothing happens, nothing happens. And nothing happens. If any of your listeners are beginning to sort of get bored with the whole European thing, which is totally understandable, because today we had yet another meeting in Rome. The reality of the situation is that Europe is bust. And how on earth how on earth? The politicians deal with that? I really don’t know, they have got no answers at all. This is why they meet and they come up with blandishments, like, we never need another hundred and 30 billion growth package, you know, and we’re going to introduce the Tobin tax, I mean, really, they’ve come out with nothing, their real problem is their bust, and they cannot, cannot face up to it.
Jason Hartman 48:05
Well, first of all, a comment on something you said a while ago. And that and that salvo is, is that everybody listening needs to understand that what always happens with government, the larger it gets, the more abusive it becomes. It’s always the way of things it never, ever, anywhere in history or anywhere on Earth, there is never an exception to that rule. And what happens is like in Greece, like in California, and with the federal government of the United States, in general, the people running the show that will will dip their hands in the till to a greater and greater extent, and give themselves more lucrative and more luxurious packages, pensions, benefits, earlier retirement ages, the public employee unions are destroying California. They’ve destroyed Greece, look at what’s happened in Michigan. I mean, there’s just never an exception to this rule. Is there?
Alasdair MacLeod 49:09
No, I think that’s right. But the point I would make about Europe is we’re now beyond that. The politicians are no longer in a position to feather their nest in any way.
Jason Hartman 49:19
Yeah, eventually, eventually, you know, it’s time to pay the piper and we’re there. We’re up against that wall.
Alasdair MacLeod 49:24
We are that. Yeah.
Jason Hartman 49:26
So that’s what I wanted to ask you about. But I just wanted to make sure I made my libertarian point there. Okay.
Alasdair MacLeod 49:32
Well, I’m totally in agreement with it. And why on earth interest rates or bond yields for these countries are as low as they are? I really don’t understand. Would you lend money to Spain at 7%? Or six and a half? No way I would. But you see, this is why they’re in a debt trap. Because if the interest rate went to the level which I would sort of think Well, hold on a minute, that might be worth the risk, then Actually, what we’re then saying is, interest rates are so high that there’s no way they’re going to get out of this. So I don’t want to lend them it, lend them money at 10% 15% 20%, there’s no way because they’re bust, I’m not going to get my principal back. And the higher interest rates are, the less likely I am to get my, my interest, you know, my interest paid. So they are in a debt trap, which they are not addressing. Now, it can be done, if politicians understood precisely the problem that they have. And if they were not advised by Keynesian economists, they would have a chance of getting out of this problem. But neither of those two conditions are true. So I just don’t see how we can reverse the normal order of crisis first. Response second. That’s what’s happened.
Jason Hartman 50:55
Well, that’s what I want to ask you about. See, I would submit to you and the listeners that both you know, in Europe and in the United States, austerity is really not even an option anymore, although it’s going to be forced upon everybody. We’re just so far gone into this path of big government and all of these things, that it’s just a complete bust. And it of course, plays out differently. In the US, it will probably play out as the slow devaluation of people’s wealth, who aren’t playing the game correctly, because the dollar will be further debased. But in Europe, it’s just hitting, it’s just hitting a wall, right?
Alasdair MacLeod 51:39
That’s right. But I think I think there is one way in which they can defer this.
Jason Hartman 51:46
Let’s hear it.
Alasdair MacLeod 51:46
And that is for is for all the central banks to announce maybe this weekend, maybe next weekend, I don’t know, but sooner rather than later, probably to announce coordinated quantitative easing. And in order for that to work, things are going to be so bad that even the ECB can do it without the Germans complaining. And I think that that moment is pretty close. I think there is no other way in which they can get out. I mean, that that doesn’t get get them out of it. All it does is it just kicks the can down the road. But it might give Europe another. I don’t know what, if you’re lucky three months, six months? Beyond that, who knows. But I do think I do think that there is a very strong possibility that the central banks will do that. And if they did, that, the market response, I think, might take pressure off the Euro, and give a little bit of breathing space to governments. But the key to it, I think would be the other side of the deal. And that is that the ECB in Europe would have to get commitments from the governments in Europe, I mean, particularly the, you know, the the ones in trouble to really deal with their spending issues. You got to see real cuts, because it’s not just it’s not just budget deficits, it’s rolling over debt. And there would have to be really substantial cuts.
Jason Hartman 53:13
What what kind of percentages are you talking about? I think the people are just, you know, in the various countries where this applies, they’re just, they’re just too spoiled. They’re just used to the government giving them this and that and it’ll ultimately be forced, if they don’t do it willingly, at first, you know, which is, of course, a much better plan. But are you? Is anybody going to do that voluntarily?
Alasdair MacLeod 53:36
I honestly don’t know. I think I think it’s like anything else, you know, you got to be really frightened before you sort of actually get off your backside and do something about it, you know, but a really bad situation like this. And I think we’re going to get to that point where everybody is so frightened that the one thing they can agree on is that well forget, reflation forget, you know, all that sort of stuff. The fact is that we are bust. And we got to get out of this problem. And I, you know, the idea that the idea that the eurozone would break apart, I think in terms of desirability, comes second to actually keeping the thing going. And that’s really a very, very big incentive for the politicians to buy into real estate charity and buy it. I don’t actually, I mean, when it comes to what austerity is, actually what we’re talking about is cutting the inefficient spending in the economy, which is the government spending. It’s that that is crowding out the entrepreneurial relationship between well between entrepreneurs, and the consumer. Because that is where the progression in an economy comes from. It doesn’t come from government spending, if you actually cut that government spending and maybe through QE keep the banks afloat. Then you Got a chance that perhaps, while your GDP numbers are gonna look bad, you might find that unemployment begins to stabilize after a period, maybe not a very long period. And things begin to look maybe a little bit better not reflected in SSA and things like GDP, which is just a money total, but really reflected, if you like, in the very strong likelihood that at some stage, entrepreneurs are going to begin to think Hold on, I’ve got a way of making money out of this, or in this situation, people need this, they need that they’ve got a little bit of discretionary money which they can spend on this. I think I’m going to see if I can provide it. That’s really what entrepreneurial ability is all about. And that can happen. If you remove all this excessive, wasteful government spending. That’s what’s got to be cut.
Jason Hartman 55:53
And how will the situation with the European Union play out with the non-member countries?
Alasdair MacLeod 56:01
Sorry, you do you mean the eurozone with those that are not in the Eurozone?
Jason Hartman 56:07
Alasdair MacLeod 56:08
Yes, that’s quite a difficult one, because David Cameron, for example, has been running around Europe recently, trying to protect British interests, because our banks have enormous exposure to the Eurozone. But I’ve been talking to a number of people, you know, in places like Madrid, and so on, and I get the feeling that they are in real problem. They’ve got real problems in in somewhere like Spain. And for, you know, the bank manager, if you like to sort of come round and say, I don’t like what’s going on, just as sort of it risks rubbing people up the wrong way. So the answer to your question is, I think that the relationship between, particularly the UK, if you like, is as the largest currency, outside the eurozone single currency outside the Eurozone. I think it could be very, very difficult. And I think our politics is going to be very careful how they tread on this one.
Jason Hartman 57:04
Yeah, it’s really quite a mess, isn’t it? I mean, wow.
Alasdair MacLeod 57:08
Yes, it is. It is.
Jason Hartman 57:10
Let me take a brief pause. We’ll be back in just a minute.
You know, if any, sometimes I think of Jason Hartman as a walking encyclopedia on the subject of creating wealth.
Well, you’re probably not far off from the truth bridge. Jason actually has a six books set on creating wealth that comes with over 100 hours of the most comprehensive ideas on investing in business. They’re in high quality digital download audio format, ready for your car, iPod, or wherever you want to learn.
Yes, and by the way, he’s recently added another book to the series that shows you investing the way it should be. This is a world where anything less than a 26% annual return is disappointing.
Jason actually shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us. We can pick local markets that are untouched by the economic downturn, exploit packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches us how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government.
He’s recorded interviews with Harry Dent, Peter Schiff, Robert Kiyosaki, Pat Buchanan, Catherine Austin Fitz, Dr. Denis Waitley, T Harv Eker, and so many others who are experts on the economy, on real estate, and on creating wealth,
And the entire set of advanced strategies for wealth creation is being offered with a savings of $385.
Now to get your creating wealth encyclopedia series complete with over 100 hours of audio and six books, go to Jason hartman.com forward slash store.
If you want to be able to sit back and collect checks every month, just like a banker, Jason’s creating wealth encyclopedia series is for you.
Jason Hartman 59:14
Let’s talk about the states for a moment I love whenever I go to Europe, or out of the country in general, I love reading and you know, more foreign media and just being exposed to sort of the attitudes and the other the perspective on the United States from outside of the country. What are your thoughts about the US and particularly our problems as they relate to monetary and fiscal policy, you know, in terms of your outlook for inflation, or just kind of where things are going? I mean, there are there are quite a few deflations out there still, even in the midst of this massive debt and in spending and it surprises me. It really does.
Alasdair MacLeod 59:53
Yes, I think the principal difference between Europe and the US and for that matter, the UK as well, is that we have central banks. I mean, you’ve got the Fed, we’ve got the Bank of England, who can put off the inevitable by printing yet again. And that’s what’s happening. I mean, when I look at what’s happening to money supply and things like that, in the US, I get the very strong feeling that you’re going to have another round of QE, it would suit to have some more QE, because your government has got to be funded, your bank’s balance sheets are going nowhere. There is a risk of contraction, we’re beginning to see that the economy in both the UK and the US is beginning to roll over. And the thought of a shot from Europe is very, very concerned.
Jason Hartman 1:00:43
What does rollover mean, when you say rollover? What do you mean by that?
Alasdair MacLeod 1:00:46
Well, if you’ve had a little bit of sort of recovery in GDP numbers if you like, and there’s an anticipation that things might get a little bit better, but that sort of disappearing into the rearview mirror, and the reality coming up is not quite so good. So on that basis, I can see that pressures for a new bout of quantitative easing are going to mount on the Federal Reserve Board. And I think there will mount on the bank of him as well. So what that does, basically is it just buys time, it doesn’t deal with the underlying situation, if anything, it makes it worse, because you made the point earlier about how the destruction of savings is going on. printing money is destroying savings. Now as to what how that gets recognized in the market, you’ve got a situation where the Federal Reserve Board are trashing their own currency at the moment, the currency is supported, because most international businesses run their balance sheets and dollars, where they have currency risks. They’re trying to wind this down so that they didn’t, you know, whatever their view on the dollar, from an accounting point of view, if you go back to the dollar, then you know, you’ve dealt with the risk problem as it were. And that’s what’s been going on at the moment. But at some stage, that’s going to cease, I would think, at some stage as well, you’re going to find that the dollar will ease in the foreign exchanges against commodities. And as that happens, price pressures will begin to mount in the US. So inflation will then sort of come back, I know that inflation is understated.
Jason Hartman 1:02:27
By 50%. At least. I’d say
Alasdair MacLeod 1:02:30
Well, yeah, absolutely. I mean, but we’re talking a bit of a nonsense, because there is no such thing as a general price level. I don’t know about you, Jason, but you know, the things I spend my money on would probably very different from what you spend your money on. So the idea,
Jason Hartman 1:02:45
Yeah, everybody has their own personal inflation rate, no question. However, they keep manipulating the basket of goods, you know. They keep they keep changing it and weighing it differently and substituting
Alasdair MacLeod 1:02:57
It’s a nonsense. It’s it is a complete nonsense, the whole, the whole of that sort of statistical thing is as it is a nonsense, there’s no other word for it. So you know, I think that at some stage, the pressure is going to come back on the dollar, your inflation, I think is going to start to perk up, even even without any economic recovery, if you like, call it a stagflation thing. And really, the reason that happens is because the dollar which has no intrinsic value whatsoever, other than the promise from your government, the full faith and credit of your government is exactly the same with with the pound sterling and the Euro, for that matter. That begins to be eroded in the marketplace. And as that begins to be eroded in the marketplace, you will find the prices rise. And as prices rise, you’ve then got the prospect that interest rates have got to rise, because the market will no longer wear that situation where the Fed suppresses interest rates at zero. And under those circumstances, then you’re looking at government deficit, which really is so obviously out of control. Your government is already in this debt trap. You don’t notice it, because the Fed has managed to depress borrowing costs to very, very low levels.
Jason Hartman 1:04:13
Well, again, you know, they’re manipulating the rates. They’re so artificially low, given the the kind of debt we have. It’s just it can’t go anywhere, but up in my opinion, I in fact, I can’t believe they’ve been able to manipulate this long and kick the can down the road this long. I mean, I thought rates would be much higher by now.
Alasdair MacLeod 1:04:34
Well, it’s a reflection I think, quite simply, it’s a reflection of, of the expansion in narrow money, which as we know, really took off after the first banking crisis, back when Lehman Brothers fell over and Bear Stearns, but we’re coming up to second crisis so we’re likely to see another round of this. I think I can’t see how we can avoid it. If, we’re going to have a Keynesian rescue of, you know, the global economy,
Jason Hartman 1:05:06
The real estate market in the US is really in a recovery mode, it’s actually quite shocking. And I just sort of attribute that to all the money printing that it stabilized with, you know, when I use that word, sarcastically, I guess, stabilize the stock market, right after Obama’s election, all of the the QE and the bailouts and so forth, and just the Keynesianism, and I think it’s finally trickled down to the real estate market in the US, where I call it the nominal recovery. But But real estate prices are going up and inventories are shrinking massively all around the country, it’s it’s really, rather amazing how how quickly that’s turned inside of just a year,
Alasdair MacLeod 1:05:51
I don’t think we need be very surprised. Now, obviously, I know nothing about the detail of your real estate markets. But I the one thing I look at, if you’d like from our side is I look at what you get on your money on the street, I look at alternative investments, there may be some equities that you could buy, if you find a company that pays a nice safe dividend and all the rest of it. The alternative is that you can buy a house at a depressed price and rent it out. And you’ll get an income on that. And you could take the view that if I can sit on this save for the next five or 10 years, then you know, it will probably recover. And I’ll probably make a reasonable return. And I suspect that that is the logic behind the recovery that you’ve got in your real estate markets.
Jason Hartman 1:06:38
Let’s talk about gold and precious metals for a moment if we can. Now you’re a writer and the podcaster for gold money. Tell us about gold money I hear about that company frequently in in, you know, the precious metal circles or the gold bugs circles. What makes it different?
Alasdair MacLeod 1:06:55
I think what really makes it different is that it offers a facility to people who want to hold physical bullion, not in their homes, but in a secure location. And go money offers locations in London, Zurich, and also in the Far East, and particularly outside the banking system. This is important, because if you’re if you’re trying to ensure against systemic risk, then you probably would take the decision that you don’t want to hold your insurance policy within the banking system. So that’s basically what gold money does. And it’s very, very simple. They don’t do anything else. They hold gold, silver, platinum, palladium, I suppose. And, you know, it’s that’s what they do is very, very simple. And I would I think the key, the key point is that it’s you can have your gold, silver, whatever held outside the jurisdiction in which you live, which makes it slightly harder for a government, your government to actually, you know, get their hands on it, because it’s sort of just that little bit removed. And it’s outside the banking system. And it’s really as simple as that it’s secure. It’s simple.
Jason Hartman 1:08:16
So with with your last comment, and I want to just play devil’s advocate with you on a couple of things. You said that it makes it harder for one’s government that’s outside your own jurisdiction to get their hands on it. But doesn’t it make it harder for you, the investor to get your hands on it too?
Alasdair MacLeod 1:08:32
Well. I mean, yeah, it depends on the circumstances. If we, if we have a complete collapse of a global banking system, then accessing anything is going to be interesting. Let’s put it that way. At the moment. Banks are regulated in you know, in different jurisdictions, but if the banks go, I suppose the regulator’s go as well, I don’t know. Now, at that stage, really, what you’re going to want is you’re going to want to have something which is that insurance policy in the background, which would help you now what I would probably do if I thought that was likely, likely is I would have a facility in a company like gold money, but I would have some spare change as it were in gold and silver at home. But I wouldn’t want to have everything at home for the simple reason that you know, I’m then open to being robbed or whatever, whatever.
Jason Hartman 1:09:31
Yeah, you know, I always say that to my listeners. And yeah, I want to talk to you about gold and so forth here but my grandfather was a bit of a coin collector gold bug himself and he suffered a home invasion robbery. That was not pretty at all and very dangerous to keep keep it in your house and it’s certainly if you ever do do not tell anybody. Because it is it is a very risky proposition. I would say so you know, I agree with you there, but you know, here’s the thing look at there are a few different kinds of gold bugs, if you will. Okay, there, there’s the person who believes in systemic failure, who believes that the the zombie apocalypse is coming. And you know, you should have gold, okay? Yes, there’s that one out there who believes in the collapse of the dollar, the collapse of civilization. And that’s one kind of person, okay, and I see their points for sure. And then there’s the other type of person who just believes the dollar or when I say the dollar is substituted for any currency in any country, any fiat currency is going to collapse, or not totally collapse, or is just going to continue being devalued. And they want a hedge against that inflation. They want to store their wealth in a way that won’t be debased along with the fiat money. So you have these two kinds of people. Now let’s examine the the, the really ugly scenario, the the collapse of a currency, the collapse of civilization Well, with with gold money and companies similar to that, their argument is, look, I have just a piece of paper, you know, a Federal Reserve Note, if you will, backed by the full faith and credit of the US a promise that ultimately, every fiat currency on Earth has ultimately become worth only the value of its commodity, paper and ink. Okay.
Alasdair MacLeod 1:11:21
And in fact, less than that, because most of its electronic.
Jason Hartman 1:11:25
Right, well, good point, I didn’t want to even go into the, you know, when they say the printing press, of course, that’s a metaphor, okay. But it’s, it’s electronic. Really. And so that that makes sense. But if you’re, if you’re storing your wealth with a another company, like gold money, or any company, there are other companies that do similar things, and, you know, have gold storage and so forth. Aren’t you really just accepting a piece of paper or a, something on a website that says, hey, I have $1 million in my gold money account? I mean, that’s fiat, too, isn’t it?
Alasdair MacLeod 1:11:59
No, because what you have got, if you like, is you have got an entitlement. It’s not actually an entitlement. You know, we are actually at gold money. We are acting as custodians for your property. It’s as simple as that. It’s, it’s yours. It’s not, you know, that there is no counterparty in this at all. It is it? Is your money, your gold, your silver.
Jason Hartman 1:12:26
Well, isn’t isn’t. Isn’t the government acting as custodian for the value of my, my money to?
Alasdair MacLeod 1:12:33
Jason Hartman 1:12:34
Well, I mean, obviously, they’re not doing a good job. I’ll agree with you there.
Alasdair MacLeod 1:12:38
Yeah, the answer is that they are acting as custodian insofar as they have received the currency. And they have discouraged you or banned you from using anything else as currency. But the if you like the, you know, the way in which they look after your interest is to put it at its That is, if you’re smart, mildest, extremely negligent, the last thing they have is your individual interest.
Jason Hartman 1:13:07
Nobody, nobody listening to this show would disagree with with you on that. Okay. My listeners are, are very in tune with that idea that the government is being very negligent, and so are central banks. But what really, ultimately, people are being asked to do with any company that stores gold, and gives you a statement, like a bank statement, saying you have this much. That is just a piece of paper to ultimately I mean, and the reason I bring this up, Alistair, and I don’t mean to be disagreeable. But, you know, I had Peter Schiff on the show a while back. And I just want to remind all the listeners that Peter Schiff predicted that gold would be $5,000 an ounce by the end of Obama’s first term and better hurry on that prediction. But, you know, no one seems to mention that it is right as Peter has been on so many things, you know, let’s see if it’s $5,000 by November, okay. But he said, You know, he was Hawking in pitching that, that people should buy gold that is stored in the Perth Mint, and he was selling this financial product, okay. And I was thinking, Well, isn’t that just fiat money too? I mean, you know, if it’s not in your hand, if you don’t have physical possession of it, it’s just a statement on a on a, you know, like a brokerage account statement or bank statement or $1 Bill $1 bill is just a statement to it’s just, it’s just, it’s all Fiat in my eyes.
Alasdair MacLeod 1:14:36
What it boils down to Jason is something which Austrian economists are very, very well, very much aware of, and advocate quite strongly, and that is in a free market. The people who will succeed in providing a service are the ones that look after the customers and have the trust of their customers. The thing that is missing Most important about any storage facility, whether it’s gold money or Perth, mint or whatever, whatever, whatever, is that they have to be absolutely clean and clear about their reputation. There must be absolutely no question in the customer’s mind about what is actually happening to my gold being held at the Perth Mint or at Sprott, or with, with gold money, that you have to be absolutely clear that you are confident in the counterparty. Well, they’re not Counterparty, the custodians for your real money. And that basically, is what we try and do. And this is this is a, it is an absolutely vital point. I mean, you’re right to raise it. And, you know, this is why it’s the whole raison d’etre behind gold money. And this is why we what we try and do is to cut out any, any counterparties. Because if let’s say you go to a bank, you go to a bullion bank, let’s say or pretty wealthy, you can open an account at a bullion bank, and you say, right, I want to put my gold and my silver in an unallocated account, the bank will say, well, we would rather you put it in an allocated account, sorry, I want to put it into an allocate into an allocated account, the bank would turn around and say, well, we rather you put it into an unallocated account, because it’s a lot cheaper for you. But actually, what that means is that they can do things with it. But you insist and it goes into an account which is allocated to you. In other words, that bank then has has a custodial relationship with you. Now, the problem is that banks are regulated, and the regulators are controlled by governments. If the bank goes belly up on a spike in the price of gold, because it hasn’t got enough gold to cover its obligations on the unallocated accounts, how certain Are you going to be that your gold held on a custodial basis allocated to you in that bag? How certainly you’re going to be that that is protected?
Jason Hartman 1:17:16
Oh, not? Yeah, not. Well, yeah.
Alasdair MacLeod 1:17:19
you know what the best will in the world, right would not go and accuse a bank of legging me over and taking my allocated gold and using it for its own purposes. But I think if I’m going to put aside some of my money into gold or silver, as an insurance policy as against against the worst, I think I’m going to want to be confident that when the worst happens, that is still mine. And that basically is what is what gold money sets out.
Jason Hartman 1:17:49
Okay. So what you mentioned about the Austrian economist a few moments ago is being absolutely certain, and in putting your faith in a reputation. Okay, you you mentioned that word and the founder of gold money in your circles. James Turk has an excellent reputation from everything I’ve heard. And in here is my qualm with that though, when someone depends on reputation, everybody has a great reputation the day before. And what I mean by that is, if you look at our friend, Bernie Madoff, he was president of NASDAQ. Okay, if you look at john corizon, with MF Global, he was governor of New Jersey, I believe he was CEO of Goldman Sachs. You look at the Enron folks before the Enron scandal, they had incredible reputations. Kenneth Lay was hanging out with George Bush, not that that’s a pale endorsement. But these were people that were at the highest levels of our system. And, you know, there are other examples as well. And look what happened.
Alasdair MacLeod 1:18:55
Well, Jason, system is the right word. Because everybody that you mentioned, was regulated, they were hiding behind the regulator. The whole point about regulation is that you can do away with any reputational issues, the moment you’re regulated, because all it happens is you say, Well, I’m regulated. So why why should you be suspicious about you know, what I’m doing? I’m regulated and I, I comply with the regulations. So so don’t call my integrity into question. Now. This is the way banks and the the whole of the financial securities industry works. They all hide behind regulation.
Jason Hartman 1:19:37
Well, in fact, they encourage regulation to keep competition out. That’s sort of a whole nother subject and we don’t need to get into but
Alasdair MacLeod 1:19:45
Yeah, exactly that. I mean, the fact is that regulation is good for business for any business that you know, might otherwise be quite regarded as quite careless with their customers. So we are a very, very different thing. We do one thing that no conflicts of interest at all, we just, you know, we will buy and sell gold and silver for you, and we will store it. And that is all we do. There’s no other conflicts of interest. And I think that’s desperately important. I mean, in terms of in terms of regulation, the regulation that we have in Jersey, is that Yeah, yes, we are regulated by the jersey Financial Services Commission, that is one of the first it’s it’s a jurisdiction, which is in the First Division, if you like of international financial centres, Jersey prices itself on that Jersey is I can tell you, because I’ve actually worked in St Helier in Jersey, it’s rather like a village and it’s like how it used to be in the City of London before massive regulation. Everybody knew who to deal with and who not to deal with. Reputation is all in a place like St Helier. And that’s why it’s a very good place for us to be, you know, that we don’t have the conflicts of interest. And people have confidence about, you know, this is this is established in, you know, one of the foremost financial centres of, you know, offshore or international financial centres.
Jason Hartman 1:21:11
I just wanted to kind of clear that up and understand that a little bit. But give out your website. If you would, Allister and tell people where they can learn more.
Alasdair MacLeod 1:21:18
Yeah, well, I have my own website as well, which is finance and economics.org, though most of my writing at the moment is for the gold money foundation, and that’s gold money.com. And you’ll find it all there.
Jason Hartman 1:21:34
Fantastic. Well, thank you so much for joining us today.
Alasdair MacLeod 1:21:36
That’s a great pleasure, Jason. Thank you.
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.