Jason Hartman plays a Flash Back Friday episode where he interviews author Jerry Robinson. They discuss his book Bankruptcy of Our Nation. Robinson explains what bankruptcy looks like and gives us insight into what to the show to share his views about what bankruptcy would look like. He gives us his opinion on the impact of bankruptcy on America’s international relations. He ends the show with a few thoughts on real estate. He goes on to explain that with mortgage debt, as an investor you don’t even need to pay this off yourself – your tenants pay it off for you.
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Jason Hartman 2:11
It’s my pleasure to welcome Jerry Robinson he is editor in chief of follow the money quarterly, financial newsletter and host of follow the money weekly, and author of bankruptcy of our nation. 12 key strategies for protecting your finances in these uncertain times. Jerry, welcome. How are you?
Jerry Robinson 2:25
I’m great. Thank you so much for having me on. It’s a pleasure to be here.
Jason Hartman 2:32
Yeah, it’s good to have you your book is fascinating. And I want to just kind of dive right in and talk about that. What, let’s maybe start off with talking a little bit about the overall situation, and then dive into some of the discussion on the Petro dollar. And what that means to people.
Jerry Robinson 2:50
Sure. Well, I mean, the you know, the book bankruptcy of our nation, I don’t think is really a prophetic book. Whenever I wrote the book back in 2007, I was under the impression that we were going to be in for a major, major economic collapse. And I was desperately trying to get the book published. So we could get the word out, and no one would touch it. In fact, no one would even consider it until it was September of 2008. I was speaking at a conference out in Denver, I was talking about this very topic. In fact, the name of my topic of my speech was surviving financial chaos. The market totally imploded in September of 2008, as you will remember, and when I got back from the speech that I was giving, I had five missed calls from my my literary agent, and he said, we have five offers for the book. And it was such an exciting moment for me. So we were able to, you know, get get the book published, the publisher wanted to get it out very quickly. It came out just at the end of 2008, early 2009. And the book really breaks apart what happened, what we thought was going to happen, and of course, what ended up happening with the whole economic crisis, kind of explaining in layman’s terms, what really happened. And I think it’s unfortunate that so many people today often try to formulate answers or solutions without firmly having a grasp of what the real underlying problems are. And so in the book, we lay out what these underlying problems are, ie, fiat money, ie, a debt based monetary system, ie fractional reserve banking, I mean, many of these things that are very faulty, they have terrible foundations, they cannot last they’re, um, they’re unsound. And over time, they’re simply going to break down and that was the whole message of the book, the book goes on, and explains how people can take actions, you know, to protect themselves to specific things that people can do. And so the book is a mixture of both what went wrong and what individuals can specifically do to insulate themselves from what we Believe is still going to be a further downfall in the years ahead.
Jason Hartman 5:03
And what does that downfall look like when you talk about bankruptcy of our nation? I mean, obviously, we create fiat money in mass quantities out of thin air. And, and we can get away with this for a few reasons. Number one, you know, every nation can get away with it for a certain amount of time, and then it ultimately becomes unsustainable and the country collapses. But the difference with the US is, we have the largest military in human history. We have the reserve currency, at least for the moment. And, you know, several other factors that I think do make it pretty unique. So what does a bankruptcy look like? Does it look like a collapse of the economy? Or does it just look like, you know, we’re inflating away this irresponsible spending that the government has been engaging in for so many decades, and especially the last seven years? And and and most people are just impoverished by the inflation? Well, some are enriched by it, who know how to play the game and invest for it. But what what, what is the bankruptcy look like? What do you mean, when you say bankruptcy?
Jerry Robinson 6:12
Jason, what we usually refer people to is to look back to 1914, as opposed to where we are now. 2014 100 years ago, you had a very bloated British empire that was on its way down, and everybody knew it. And then you had this is sending United States of America that was very disarticulated. It developed the Fed in 1913, and suffered from the Panic of oh seven before that. And then as we got into World War One, Europe tore each other apart. And this really benefited the United States. The United States then emerges and enters this roaring 20s. Era, and then has this great depression. And then World War Two, of course, is where United States really takes off. So it’s really since the 1940s that America has really had the the stranglehold, so to speak on the global economy, and it has had that world reserve currency status. Well, it’s similar to what’s happening. Now, if we fast forward from 1914. From that picture, to 2014, we see something very similar. The American Empire itself is bloated, it’s overextended. And it’s all over the place. Our military is woefully underprepared for some of the challenges that it faces. And it simply cannot afford to take care of all the things that it wants to take care of. It’s over promised, and now it’s going to under deliver, that’s exactly where the British Empire was 100 years ago. And China is the new United States, so to speak, in this picture, where here we have China rising and you have all these complaints about well, China certainly can’t get much bigger or certainly it’s going to implode, or certainly it’s going to have a problem. Well, that’s what they said about the United States back in 1914. And no doubt, it was a very disarticulated time for the United States, the US dollar was, you know, still being formed. And it was not it nothing like it is now, it was still blocked out of many international financial markets, it took a while for the US to reach its state of ascendancy and then finally reached its peak, which really came back in the in the 70s, and 80s. Since that time, we’ve been on the down down the trend, even though it may not feel like it. And we have countries like China that are now rising, to take our place. It is simply the mechanism of history, Jason, that empires rise and empires fall. I think whenever you’re inside of a declining Empire, you tend to either a ignore it, because you think, you know, maybe you can’t see it because of the fog of war. Or be you think to yourself, this is going to be the worst thing that ever happened in the history of the world, because it’s a bit arrogant, you know, we all tend to think that our country and our situation is the most important in the whole world. Well, we expect the us to continue declining at a not a precipitous rate, but at a aggravatingly a sharp rate, where I’ll give you an example
Jason Hartman 9:08
if is that worse than precipitously? Yes,
Jerry Robinson 9:10
it is. Well, I’ll give you a perfect example, if you have a choice. And this is terribly morbid, but let’s think in the terms of Empire, if you have the opportunity to kill the Empire by throwing it off of a cliff, or by rolling it down a steep grade, and letting it hit every single rock on the way down, and then it dies. Just throw me off the cliff off the cliff, right. And I think that’s what most people would say, just throw me off the cliff, don’t roll me down the hill and make me hit every rock along the way. And that’s exactly what the US is doing. It’s it’s rolling down that steep grade. This is a slow, steady decline. And it’s going to be not just economically challenging and economically damaging, but it’s also going to be and we’re beginning to see this now, psychologically damaging Americans can’t quite come to terms with the fact that other nations may be rising or that other currencies may challenge the dollar. They just can’t seem to grow. ask that. And I, and I think that Well,
Jason Hartman 10:01
yeah, I mean, look, I definitely get the idea of context. I mean, look, fish live in water. And I assume they probably don’t notice the water. You know, we live in air. And thankfully, unless we live in Cairo or Mexico City, we don’t notice the air, you know. And so you’re right about that. I definitely see that. And there’s this kind of arrogance. And you know, there’s the fog of war and all that stuff. But you know, it’s so interesting because I would, this is such a contrast from the one one interview I did yesterday with a guy named Peter z. Han, who used to work for strap for isn’t a VP and he wrote a book called The Accidental superpower the next, the next generation of American preeminence. And it just talks about how only because this is a relative issue. Okay, America is a mess. I agree. And I agree that it’s in decline, okay. But look at the rest of the world, my God, we may be mismanaged and doing all sorts of things wrong. But everybody else has got fiat money, too. And they don’t have the reserve currency. They don’t have the big military, they don’t have the big brand name. And they don’t have our geography, which I think cannot be underestimated the geography
Jerry Robinson 11:13
Well, go ahead. Well, I’m just Well, I think that’s a good point. But again, think about America’s military. I mean, the America’s military. The United States right now cannot afford it. Right now. Oh,
Jason Hartman 11:24
we got we got to get out of everyone else’s business. I mean, you know, this is just absurd, acting, acting like the world’s policeman, you know, and it’s usually not for humanitarian issues as we would like people to believe. But um, but you know, that’s neither here nor there. I mean, we just got it. We got it. You know, Ron Paul is right, we’ve got a contract these military bases all over the world. It’s absurd. It is every sign of Empire, just like he said, I agree. No,
Jerry Robinson 11:49
well, well, what makes it even worse, Jason, is the fact that it is too big. And yes, we are in too many places. And yes, we have too many bases. But what what the sad part of it is, is that China, and other countries like it are the ones that finance it. So many people take great solace. And knowing that well, you know, yes, we we are pretty bad, relatively speaking. But when you look at the whole world in in focus, I guess things aren’t as bad as they could be? Well, the truth of the matter is, is exactly the opposite. It’s worse than we can imagine. Because what we have built, we can’t afford, what other countries have built, they can’t afford, what we have built we need them to pay for. And when they get tired of paying for it, then what good is that military?
Jason Hartman 12:32
What? Well, so so so tell me about that? What happens when they get tired of paying for it? You know, I mean, certainly many people, including yours truly have said what happens when China stops buying our debt in Japan stops buying our debt. You know, and then and then we’ve got to see we’ve got to raise interest rates to attract investors. Well, our own I mean, it’s such a frickin Ponzi scheme. It’s just, it’s disgusting. But our own Federal Reserve just buys our debt instead, you know, I mean, when what a scam, the whole thing’s a sham, obviously. But, you know, so what? I mean, you know, how does it look when that happens? You know,
Jerry Robinson 13:12
this, this reminds me of the 2008 and 2012. Presidential elections. We just had ron paul on the pro on our weekly program. laughs huge fan of Ron
Jason Hartman 13:23
Paul.
Jerry Robinson 13:24
Yeah. You know, he was on and we were talking and one of the things I brought up to him was so bizarre is that all these people always tell Ron, you know, all the conservatives, especially Republicans, they have this real fond saying, they say, Well, I love Ron, Paul’s monetary economics. I just hate his foreign policy. And
Jason Hartman 13:40
you know, and he’s right about his foreign policy. I mean, you know, if he would if he would just pander a little bit, he could have one. If he would just say, look at Well, we’ll hang out in Israel, we’ll do everything we’re doing for Israel. And we won’t let Iran get a nuke, you know, if you just would have said that, he probably wouldn’t be president, a whole country would be better off
Jerry Robinson 13:57
well. Take that logic, take the logic of someone who says I really like Ron Paul’s in the Fed message. I like his monat sound money message. I just don’t like his foreign policy message. And when you when you take that and you add one plus one plus one, you get it, you get a very strange answer. And that is that how in the world can you finance our foreign policy without a Federal Reserve? In other words, they want to get rid of the Fed, they hate, they want sound money, and they want to keep dropping bombs on everybody. And you see, you can’t, you have to have a fed you can’t do it, you have to have a Fed in order to fund those wars, so
Jason Hartman 14:33
clueless. And that’s why the central bankers love war. And as long as the central bankers around the world because they know that it’s, it’s more than the military industrial complex. That’s just a first tier that everybody sees is somewhat obvious. The real complex is the government central banking complex. That’s the real thing. That is that creates the war. They have to have a war machine. They finance both sides. It’s absurd. Pete, you know, people
Jerry Robinson 15:00
just don’t think about it in terms of basic incentive. I mean, when I’m when I’m walking around, you know, in my own city, you know, there’s certain incentives that I have in there certain incentives that I don’t have, I mean, everybody in their own life can think of why do I get up and go to work, I get up, go up and get up, go to work, because I need money. And, and those are real basic incentives that we all understand. But many times we don’t apply that same logic to things like central banks, what does a central bank want? It wants to loan money to a government? How do you loan money to governments, you create a demand for loans from the government. What’s, uh, what’s the perfect way to create demand for the government for a loan, a war? So I mean, so when you really back up into it, what you just said is very correct, but it’s because of the incentives. And many people don’t think that far. They just they realize that they’re driven by incentives, but they forget that these guys, you know, who are Republicans, Democrats, central bankers, whatever the case might be they have incentives to, and usually they’re contrary to what the, you know, is best for this nation going forward. Yeah,
Jason Hartman 15:55
no question about it. So, so what, what does the bankruptcy look like? Is it just inflation? I mean, not just, that could be really bad, obviously. But when you say bankruptcy of a country, I mean,
Jerry Robinson 16:08
how does it look, look, America is is unique in the fact that it does have more wealth, on paper, and even in, you know, physical form than many, many other nations. I mean, so we are very, very, very rich, relatively speaking. And again, that means that the bankruptcy is going to first take the form of a psychological pain, it’s a psychological denial, it’s no China is not getting bigger, no, China’s going to fail, no, the Euro is going to crash. No, you know, the middle of the Middle East stocks can’t possibly rise. No, you know, India’s not going to rise, because it’s very America centric. So there’s a, there’s a psychological denial, which will cause many people not to diversify their investments not take advantage of foreign growth, and therefore, they’ll stay right here in the United States. And as that ship sinks, we’re going to continue to see that psychological pain, but the actual physical and financial pain that’s going to be inflicted, is going to be as you mentioned, inflation in the fact that we have printed so many dollars, and there’s so much demand for the dollar. Therefore, the central bank has a permission slip to print money, whenever we have a problem. Think about the Alan Greenspan doctrine. The Greenspan doctrine was this 1987 Alan Greenspan gets into the Federal Reserve, he’s the chairman. And we have a big stock market crash, he cuts rates as a solution. In 1994, the tequila hangover, we he cuts rates 1997 and 1998, the Asian financial crisis and long term capital management debacle, all that the Fed cuts rates 2001, they cut rates, 2003, they cut rates, I mean, they just it’s all they do, and they print more money and print more money. Well, over time, once that becomes the solution to everything, then you become addicted to that solution. Well, here’s the problem. If the dollar itself is not in demand everywhere, like it is now, then you lose that permission slip to print money, then you can’t solve the problems of a nation by simply hitting the print button. Because there’s nobody around the world who is willing to hold those. And that’s that’s how the whole thing works. If we can print the money and then get it out of the country, then we don’t have that inflation. But what happens in a case like this is where you don’t have that global demand for the dollar, because maybe people want to hold you on. Or maybe people want to hold euros, or maybe they want to hold gold, you know, something like that, well, then they don’t need as many dollars. And as that demand for dollars goes down. So we also lose the permission slip to create an excess of supply. And here’s the here’s the big, big kicker here. If you live in a economy, Jason, that, let’s say that we live in this play economy, or this fake economy, and it has a million dollars total supply, that’s it, that’s the total money supply. Well, you have no houses that cost $2 million. I mean, it’s impossible. Everything has to cost less than a million dollars. In fact, it has to cost dramatically less, because you have to spread everything out across that does that amount. Well, that’s, that’s an essence, what we have done, we have driven up the amount of money and then we’re surprised when our 401 K’s go up, or when our house values go up when we get a raise. In fact, where we are today, Jason, and this is that psychological pain I’m trying to explain. We live in a time now where the present must be the minimum, people are dissatisfied, if the market does not go up, something is wrong, if they don’t get a raise, something is wrong, if their house value doesn’t go up, something is wrong. If their IRA doesn’t go up, everything, they’re addicted to the present, being the minimum, everything has to be the minimum that everything has to go up from here. And the problem with that is that that’s completely unsustainable. A that’s not how things have worked throughout history because of the gold standard. And B, that’s an unsustainable model, things cannot continue to go up in value. So here’s what we say that as we see a decline in the demand for the dollar around the world and and for us debt. What we’re Going that that’s going to translate into a an overall deflation in the US prices, it’ll begin with an inflation, you have all of these dollars come back from around the world, perhaps it happens instantly. But I think it’ll happen slowly. You have all these dollars flowing back. And then we have to suck them out. How do we do that we suck, we suck money out of the system by raising interest rates, if you and I are driving down the road, and we see a bank and they’re saying, hey, we’ll give you 8% of your for a CD, you know, we’re hitting the brakes and taking all of our money out of the mattress and throwing it in the bank. That’s how the banking community, that’s how the banking industry sucks money out of the out of the economy to prevent high inflation. And so what they’ll do is they’ll suck the money in through high interest rates. And that seems to fix the problem. But we have so much excess money, that we’re going to have to keep doing that over and over and over again, to where it’s going to cause major problems with all you know, think about the trillion dollars we have in student loan debt, think about the growing, think about all the credit card debt, think about all the the adjustable rate mortgages out there, I mean, it’s just a mess. And so if you get higher interest rates, you know, that’s going to be very devastating to people and this present is the minimum kind of psychology, where everything should go up, that’s going to be destroyed. And in fact, it’s going to be the opposite things will be declining and deflating back to a place of normalcy and back to a place of sanity. And that’s I think going to be the hardest thing for people to understand is that things don’t go up anymore, they just seem to be going down every year. And that’s because we have too much money in the system, it’s going to have to be reduced over time, because the global demand will not always exist for it. And that means that housing prices, stock prices, you know, the the amount you pay for or the amount you get paid when you go to work, all of those things are all factors based upon the amount of money in the system. And if the if the money supply shrinks, so to all those values,
Jason Hartman 21:52
right, okay, so if the money supply shrinks, then we have deflation, if it expands, we have inflation. I mean, that’s the general rule. As you know, Milton Friedman would have said, you know, money inflation is a is is and is always a monetary phenomenon or something like that is famous quote. So, you’re saying that, I mean, I think the opposite will happen, I think that the government will print their way out of the the irresponsible problem they’ve created, they’ll just create more money out of thin air and other governments won’t buy our treasuries, you know, of course, we’ll we’ll attempt to throw our weight around and bully them into it, whether by you know, trade agreements or Visa requirements, or maybe invading the country with the military and whatever. I’m not saying it’s right, I’m just saying this is what goes on. Okay, well, well, I think
Jerry Robinson 22:45
we’re on the same page there, we’re just we’re probably coming at it from different angles, what I’m saying is, is that we are going to see a period of great inflation, it’s going to be a hyperinflation of sorts, but hyperinflation never lasts forever. It has to, it always ends in a period of great deflation and revaluation. So it’ll begin as a period of inflation. But the but the rates will have to go up in correspondence with that. And the rates, we’re not going to be able to get them high enough to be able to manage the excessive amounts of money. So even if they print money, if it doesn’t leave the country, they’re just going to be creating more inflation. So they’ll have to raise interest rates, it’s a vicious cycle. So it’ll begin as inflation, there’ll be a big response to the inflation. And then as they raise interest rates, and as the economy grinds to a halt, then we move into a period of deflation, because again, they don’t have a permission slip to print money anymore. If the Chinese will hold the dollars and keep them out of our banking system, we don’t have inflation. But if we print them, if the Fed prints them, and they don’t leave the country, that’s inflation, you can’t you can’t get rid of that. So they can print all they want to if it doesn’t leave the country, then you have inflation, therefore they’ll have to raise rates, and then that will stop working. So they can keep printing, like you’re saying, but there will come a time when if the if the money is not demanded outside of the country, they won’t, they’ll be they’ll be smart enough not to hit it, because they’ll just be creating a terrible amount of inflation that will ultimately lead to a period of deflation, as we move back to a level of sanity.
Jason Hartman 24:12
So I think one of the challenges when we’re looking at this type of very, obviously, the economy in the country is very complex, but then you take it to a global scale, and it gets incredibly complex. And so what economists are trying to do is anticipate how people countries companies will react to various stimuli. And, you know, like, in the past 10 years, almost every prediction I’ve made about the economy and the real estate market has come true, except one glaring mistake I’ve made and the glaring mistake is interest rates. If you asked me in 2005, would we have you know, significantly higher rates by 2008? Okay, I would have said Yes, and I did publicly. And so I was completely wrong about this. And the reason I was wrong is because it doesn’t make sense. And and and this isn’t just about logic and math, there’s so much more going on here that is perverting the incentives. And one of the things that’s doing that is, is this giant government we have with its military, and with the fact that it can kind of defy gravity and kick the can down the road. I mean, it’s been doing it for a long, long time, and it’s really doing it now insanely. But you know, who’s to say, Jerry, how much, you know, deficit and how much debt and how much unfunded entitlements for the future we can withstand? Is that number 17 trillion? Is that number 60 trillion or 200 and 20 trillion. I have Laurence Kotlikoff on the show, and he says, unfunded mandates are 200 and 20 trillion with a T dollars. The whole the whole GDP of the planet is only about 60 trillion a year. I mean, that’s insane. Right. And we would all agree with that. But it doesn’t exist in a rational world. I agree. If you do the math, you know, absolutely. I mean, we should be sucking wind by now and having 25% interest rates, but it’s not just math. You know, I mean,
Jerry Robinson 26:25
thoughts? Well, I would say that’s certainly true. I mean, the interest rates being so low now, it again, as you knew even use this word, it’s distorting all, it’s artificial. It’s distorting incentives. It’s distorting the overall market. It’s hurting savers. It’s hurting people who it’s punishing those who want to save. It’s encouraging speculation. It’s doing everything, everything that we did in 2007, we haven’t learned a single lesson from it, we’re just repeating it over and over and over again. And countries get a few chances to do this. Jason, they don’t get it. They don’t get a chance. They don’t get a pass forever. And you already have countries like China, Russia, India, no, the BRICS nations who are coming together trying to say, look, we’ve got to come up with a different solution. We
Jason Hartman 27:09
You can’t blame them. We’re exporting our inflation to them. They’re the ones hit with it, not us. I mean, you know, we are a little bit but you know, it hurts them more. It’s really unfair. You know,
Jerry Robinson 27:18
it really it really is. And it’s becoming more exposed as to America’s true intentions with all of this. I mean, you know, back in the night in 2000, September 24 2000, it was a the September of 2000. Saddam Hussein emerged from a meeting with all of his, all of his cronies. And they had decided to take a gamble and move from accepting dollars for all of their crude oil to accepting euros about three or four or five, four years later, he was hanging from a tree. And then you had Iran do something similar, yet North Korea do something similar. They said, we’re not going to pay for anything except for we’re only going to use euros, we’re only going to buy from people who sell in euros. And then you had, you know, Venezuela do the same thing. And then you have bush talking about this axis of evil and these evil, evil countries, who
Jason Hartman 28:09
are the people that don’t participate in the central banking cartel are the evil,
Jerry Robinson 28:12
right? Yeah, these countries conveniently, these countries, these countries are extremely evil, they have terrible human rights records. And therefore we need to isolate them and call them the axis of evil, by the way, ignoring Saudi Arabia, who, who, you know, still publicly beheads people and still has terrible human rights. You know, if you talk about human rights, I mean, so Saudi Arabia tops the list or China, but there was no mention of that, because China and Saudi Arabia, understand how the drill works. You use the US dollar, and you don’t fight back? Well, China has been fighting that Russia has been fighting that and you’re beginning to see Russia now being labeled as a part of this axis of evil. You know, it’s a it’s an evil empire. Again, this colder war, we’re saying so it’s all has to do with protecting our petrodollar system that we have built back. We built this back in the 70s, after the Bretton Woods system broke down. And so, you know, the Petro dollar system now is breaking down. Before eyes, many countries are moving away from using oil for dollars and dollars for oil. Instead, they’re looking for other things, you know, China and Russia are using their own currencies when doing a trade in oil. And see, this is the kind of thing I’m talking about Jason, if everybody around the world must have $1 in order to buy oil, then it creates that artificial demand for for the dollar. And that’s exactly what we’ve done. We’ve created an artificial demand for the dollar that didn’t exist prior to the 70s. Everybody has to have it. They don’t want to have it, they have to have it. Well, what happens when that goes away? Well, suddenly you’ve got to figure out what to do with all these trillions and trillions and trillions of dollars. And if those things aren’t going to be held by all these countries, they’re gonna have to come back here. And then we’re gonna have to decide either a everything that we have is now going to have to be worth more or be we’re gonna have to suck this money out of the system and raise rates, and that’s going to cause you know, it’ll lead to a period of deflation. This is what I’m saying.
Jason Hartman 30:05
Okay, so let me just ask you about that before you go on. What you’re saying is that basically, if those dollars have to come back, that’s because the US is no longer the reserve currency. The dollar is no longer the reserve currency.
Jerry Robinson 30:18
Yeah, there’s no there’s no further demand, there’s no need, I don’t need to hold the dollar, I can hold my own currency, because now I have other countries who are willing to take my currency for for things instead of making me accept, you know, convert to $1. And so because all of these nations around the world with a gun to the head, artificially have to prop up this artificial demand for the dollar to buy things. It’s created this permission slip for the Fed, where anytime we got a problem, we just print money, well, that’s fine. But what happens whenever these countries begin to trade in their own currencies, they don’t have to keep the dollar around. So they send the dollar back. And when the Fed hits the print button, then it doesn’t go anywhere that all the money stays in the country. And that’s when the Fed, that’s when the game is over. That’s what
Jason Hartman 31:04
so what so what would what would lead up to that, what would have to happen for and what you’re describing is the the dollar not being the reserve currency anymore, right?
Jerry Robinson 31:13
Exactly. Yeah. Well, it could take on a number of things that could happen. Number one, Saudi Arabia could suddenly decide that it no longer wants to use the dollar. It’s tired of the US it’s, you know, it’s gonna have a new deal with China or a new deal with Russia. So you could see something like that you could see, I think Saudi Arabia, in many ways, is the linchpin that props up the dollar more more than people realize. Because
Jason Hartman 31:36
Because we sent our Economic Hitman over there to do the job years ago. So yeah, Saudi Arabia was a wasteland. We turned it into a semi modern country. I don’t want to say it’s modern, when they’re cutting heads and hands off people. It’s it’s despicable. But
Jerry Robinson 31:53
yeah, go go. Well, of course, that that’ll be a very big shock. I think for many Americans, when they see bombs falling on Saudi Arabia, because they’ve always thought that Saudi Arabia was somehow different than all of the other, you know, Islamic terror terrorist regimes that are over there in the Middle East. They’ve always thought Saudi Arabia was our buddy. They didn’t realize that it was just a backroom financial deal, that as soon as it goes wrong, the bombs are going to fall. I mean, the United States hates Saudi Arabia, Saudi Arabia hates United States. That’s no, that’s no secret. But what is a secret is why we like each other, we like each other, because they take dollars for oil, and they don’t complain about it. And they and they turn around and take those dollars, and they invest them in US bonds is called the petrodollar recycling has been going on for years. And so Saudi Arabia gets gets the whole thing and they get all the benefits. But you’ve got groups like ISIS now running around saying Saudi is the great Satan, and they want to take it down. And so over time, when, when this Royal Saudi family, which has really buddied up with it with America, when they lose power, or when they change their minds, the whole balance of power in the Middle East changes in the demand for the dollar, certainly goes with it. So the US is playing a very dangerous game, trying to manage all of its relationships around the world, trying to keep peace with the right people, and trying to continue to fight the the other people. And in the long run, it’s all going to break down. So sorry. Okay,
Jason Hartman 33:16
so let me ask you one thing about that. So one thing you didn’t address in that equation, which I agree with so far, is the fact that Saudi Arabia and the rest of the Middle East is about to lose its biggest oil customer, because we are probably going to become an actual oil exporter. Pretty soon. I mean, the US is so much richer in terms of oil than we ever realized. And then Canada, of course, is to I mean, the US is going to be energy independent. I mean, granted, it might be with fossil fuels, but to the chagrin of the Obama regime, but, you know, we we are rich natural resources, as you mentioned earlier, and we didn’t even know it until fracking came along. And, and oil sands technologies, tar sands. So, you know, who cares about Saudi Arabia, you know, they’re gonna, they’re, they’re just going to have the rest of the world a bunch of smaller customers after we’re gone?
Jerry Robinson 34:15
Well, maybe I mean, the way to look at it, perhaps differently is to say that, you know, somebody like Saudi Arabia, they created they create an artificial demand for the US dollar because they sell their oil in dollars. And because they do it, other OPEC nations do it. So it’s kind of a domino theory, if the US begins exporting oil and doesn’t need Saudi Arabia anymore, then why would Saudi Arabia choose to sell all of its oil and dollars, why not sell it and you want, why not sell it in a different currency where somebody is actually going to give them a benefit. And so that’s the thing we can sell all of our oil in our own currency. But if we lose all of our buddies around the world who are agreeing to doing the same thing, we’re still in the same boat. So we have to In other words, we have to have a global demand for our debt. We have to maintain a global demand for our currency. If we don’t, then we implode. And I think that’s the that’s the risk that’s facing Washington right now. They have to maintain this demand globally for both. And if we and this is this is the double edged sword of the oil exports that we have, yes, we certainly have an oil Renaissance happening here. But it all be at its shale is not, you know, pure conventional oil. But nevertheless, we are still exporting that. And we’re going to be able to export it. And we’re going to do very well with that. But again, that just basically shoots all of our friends in the face, who have been agreeing to take our currency for everything. So if we’re now their challenger, they lose their incentive to continue to prop up our currency. So, so again, it’s one of those things where it’s a real difficult thing for the United States. And it’s really going to be interesting over the next decade to see how Washington handles this. Going forward, especially all the oil you just brought up, it’s a whole nother can of worms. Yeah,
Jason Hartman 35:58
yeah, it certainly is. It’s going to be interesting, that’s for sure. That is definitely for sure. The other wildcard Jerry that I think it’s worth discussing just for a moment is that, you know, of course, these countries are probably pretty disgusted with the US spending and the exporting of inflation. I mean, you know, China sells stuff to us, we buy it, and then we depreciate the value of the currency. So they we force them to sell things on sale to us for less than they thought they were getting, which is, you know, definitely not a cool deal for them. But um, you know, it’s not like the US is going to sit idly by and let the whole world just decide they’re going to trade outside of the dollar. And, you know, not go with the, the Bretton Woods plan, and then the Petro dollar plan. I mean, you know, we’re gonna do something about it, right, we’re gonna, we’re gonna throw our weight around and say, hey, look, you know, if you’re not gonna trade in the dollar, then we’re gonna, we’re gonna pressure you somehow, maybe we’ll Oh, yeah, maybe we’ll blow up your satellite, maybe we’ll, you know, and this is not a friendly game. Okay, you know, or maybe we just won’t buy as much from you. Or maybe we will impose tariffs or Visa requirements or, you know, you can hurt other countries in a zillion different ways and pressure them in so many ways, you know, that’s right.
Jerry Robinson 37:20
That’s right. empires don’t have friends. They have subjects in America point. Yeah. And America is no doubt an empire whether you know, maybe a reluctant Empire, but it’s an empire. And yeah, I mean, there are countries around the world, when they decide to make a change in the United States tries to woo them back, they’re going to have to do better than they have already. I mean, you know, for example, the United States has been over there messing around. And you know, what, that’s Asian pivot. It’s over in the South Asian area, and Southeast Asia. And it’s been brokering deals, especially the one the that’s made all the headlines that TTP, and there’s been a lot of concern about the fact that China has been left out of that, that trade agreement. And so the United States is really just kind of shot itself in the foot, it’s, it’s really not doing a great job of reaching out. And in embracing the emerging countries, it’s been very selective with the ones that it’s befriending, and China and Russia have been picking up the slack. And they have been forming relationships with many of these other emerging nations. So you’re really kind of developing this bipolar world, one that supports NATO in the US in the West, and another that supports this BRICS kind of development. And I think that’s where you end up, you end up in a place where somebody is going to have to choose sides, that the US has kind of lost its its ability now to kind of come across as an honest agent or an honest broker. I think it’s it’s hand has been shown. Everybody knows now. I mean, not only that, we’re spying on everything. We’re spying
Jason Hartman 38:49
on all of our creditors to predict.
Jerry Robinson 38:50
I mean, he’s Yeah, he does go down, you go down the list. And you think, gosh, when does the blowback really hit the United States? I don’t even think we’ve even seen the blowback from the Snowden affair. I think Americans themselves are still trying to figure out what that even means. I don’t think many people even know how to process that, let alone the companies around the world, the foreign corporations who have been targets of that there will be blowback, when you say that, do
Jason Hartman 39:13
you mean NSA spying that Snowden revealed to the world?
Jerry Robinson 39:17
Yeah, I should clarify. Yeah, I’m referring to the NSA spying, you know, that’s been going on, you know, for so long. And, and we really haven’t I mean, you know, imagine, Jason, if we were to find out that China were, you know, was actually aggressively, you know, looking at us through our television screens as we sit and watch TV on the on the couch. I mean, wouldn’t we be a little upset about that when we when we have a little more distrust about China? Would we be a little more concerned? It’s almost as if America just says well deal with it. You know, that’s just tough. We just got to protect our own and they don’t realize that these nations have feelings and they have, you know, they have they are they also have their own share of wisdom and they’re going to say this may not be the best thing to be, you know, hanging out with the with America the way that they’re proceeding. And I think over time, you’re going to have a severe blowback from that we’re already beginning to see that in the technology industry, that many of our big tech companies are running into problems because of the NSA. So I think it’s just as long slow grind, Jason, that we continue to see this downward spiral. I don’t think it’s a off the cliff, or we run into a brick wall, and it’s all over. I don’t subscribe to that theory. I think it’s a low a slow grind, a terrible, slow process that is humiliating both psychologically. And financially. Our standing in the world is already being questioned. Now. I mean, there’s so many different things we could talk about. But yes, it is. I think that that’s where we’re, that’s where we’re
Jason Hartman 40:43
heading. Okay, good. Good points. So what should people do? We’ve talked extensively about the problem and, you know, in hundreds of other episodes, or I’ve done the same, but but what what’s the best game plan for one to protect oneself against the the problems we face?
Jerry Robinson 41:01
Well, I’ll tell you, you know, I have an interesting story to share I was living in, in Texas, I was living in Houston, Texas, of all places, very big, big city. It’s not where I’m originally from, but I went down there to start a business was down there for some time. And about, oh, I don’t know, just a few years ago, something in me, just really convicted me. And, you know, I’m sure it was the Lord. And I just sensed that I had, I had to get out of Houston and get out into the middle of nowhere. And so my wife and I began doing research we said, where we move where we go, and we started looking, and we figured out we we decided to move to Northwest Arkansas. Based upon all these different factors that we kind of, you know, did a little spreadsheet, we really got kind of nerdy about it. But we really wanted to figure out where’s the best place to go for us. And for our situation, we moved up here we got a mini ranch. We got, we have we built a garden. We were slowly getting off the grid, we have wood burning fireplaces, or wood burning stoves and all of our buildings out here we have, we’re slowly getting off the grid with water with a Well, I mean, we’re doing everything we possibly can. Because Jason, I think, not just the financial things that we’ve been talking about are a threat to the American people. But at the same time, some of the punitive damage that’s going to come to America is not just going to come through the barrel of a gun, it’s going to come through a cyber attack that shuts down your whole electric grid, or it’s going to come to it’s going to come through a a cyber attack that takes down your bank. It’s going to come through a cyber attack that takes down your your local utilities. And so currently local utility companies what Wall Street Journal has been reporting on this ad nauseum constantly about how many of these public utilities here in America are dealing with unbelievable amounts of cyber attacks from China, Russia and other places like that Iran. And so eventually, one of those are going to succeed. I think it’s imperative for people to be ready. If they’re not if they are currently living in a city, I think they can certainly take precautions. There’s some good books out there on urban survival. I’m sure you have some good materials as
Jason Hartman 43:00
well, hey, I do a whole show on the holistic survival show. So yeah, there you go. Yeah, there’s a lot a lot of great resources. And, you know, one of the things I want to stress cherry is that this is not, this is not nutty, okay? it, I mean, it’s nutty, if you spend your whole life on it, and you make it everything you do, but just you know, basically for about two or $300 per person in your household, you can gain a huge edge in in just prudent rational preparedness, this is not difficult to do. Okay, even if you live in a city, you know, it’s a, it’s like the old, the old story of, you know, two hikers, they, they’re, they’re hiking in the woods and they see a bear. And, and, and one of them, they start running away from the bear. And you know, you’ve heard this trike can be, you know, story, it’s a cliche, okay. And one of them stops to, you know, tighten his shoelaces, and they and the other says, Hey, what are you doing, man, you got to keep running any and he says, and he says, forget about your shoelaces, tightening them, you can’t outrun a bear, and he says, I don’t need to outrun the bear, I just need to outrun you, right. And that’s really what it is, is vicious as that sounds, you just need to outlive or out survive the people around you. Because, you know, when you do the resources will will, you know, there will be resources available leftover to some extent at least. So, you know, I think I think three days is the first magic number. And then three weeks is the next one. Because three it’s three days water is you know, you’re gonna die if you don’t drink for three days. Okay? And, or you’re gonna get close. And and food. It’s three weeks is the number and then, you know, have a ham radio for communications off the grid. You know, it’s just some really simple stuff. You know, this is not difficult.
Jerry Robinson 44:55
No, no, it’s really not. And it’s really, as you pointed out, it’s not nutty, I think What’s nutty, is buying into the whole idea of the American dream and thinking that somehow that you know that we’re not facing real serious issues and problems, I think, you know, being awake and aware to that is, is vital. What are some of the things we do, Jason that we teach something called the five levels of financial freedom, it’s completely free, people can log on to our website and see it there. It’s FDA give out that website. Yeah, it’s FTM daily.com. That’s FTM, like follow the money FTM daily.com, forward slash, five levels. And there they can,
Jason Hartman 45:32
what are those? What are those five levels,
Jerry Robinson 45:34
those five levels are the same five levels, what they are, is they’re five steps. They’re kind of large steps with some micro things inside of them, but they’re, they’re kind of the big planks, these five steps that we have taken my wife and I to financial freedom. So we call them the five levels to financial freedom. And we went from, you know, literally from a one bedroom apartment to, you know, where we are now. And we’re much better off now than when we were and we use we use these five levels to get there and they they involve a diversifying your savings, be diversifying your investments, see diversifying your income sources. And also in in along with that our basic, you know, as you mentioned, you know, prepatory type of, of actions, we talked about the need for having a go bag, we talked about the need for having food and water storage, we talked about the need for people to actually invest in a portion of their savings, not actually invest, but take a portion of their savings and diversify, give you one example, we have something called our will be called DSL, it’s our diversified six month liquid savings reserve. Most people tell you, hey, you should have three months of liquid savings, or maybe even six months of liquid savings. Well, we agree. But we did a back test and a study that showed that if you will take that savings and not just throw it in US dollars. But if you’ll diversify it, you can really get a lot more bang for your buck, we did a study that went back 25 years that showed that if you would put your money just in three and take your six months of liquidity and throw it in three month t bills and just kept reinvesting them over and over again. Or if you had taken that same six months liquidity and put one third of it in the T bills and then taken the other third and put it into stable foreign currencies and taking the other third, the final third and put it into gold and silver for a period of 25 years, the return is just outrageous. And that’s and that’s even we even took out some of the extra gains and golden silver just to make sure it wasn’t you know, being jacked up by that price. The price gain in in metals. So that’s one thing we diversify our savings. We also diversify our investments with something we call pace. It’s precious metals, p. a is agriculture, C is commodities, and e is energy. So we talk about those areas as ways to diversify our investments against some sort of inflation. And then we also teach the absolute importance. And I think this is one of the most important things for people today is to diversify their income streams. I don’t know how many people I’ve met over the years who have one income stream, maybe two income streams, the average us family today, in America here is three income streams. Usually mom and dad have a income stream. And then there’s usually some sort of CD or money market account that throws off, you know, pennies and interest. And that’s usually their three income streams. And then they hope to get you know, a few more by the time they retire. Well, we teach the importance of having many, many income streams. And so we have a income University at our website where you can learn 22 different income streams, how to create them. Now, some people have more time than money, and other people have more money than time. So some people may not be able to get all 22 income streams because they don’t have you know the ability. But if you have time, you can always trade it and receive money. And if you have money, you can always take that and enhance its returns and do better as well. Some people will tell you, they don’t have either. And those people usually have their priorities backwards. Some people will say that they that they that they have both and that’s of course a great place to be if you have both time and money. But so all 22 income streams cover, you know, all of those different, you know, situations, whether you have too much time, but no money or a lot of money, but not a lot of time. You know, there’s plenty of things that everybody can do. And I think that oftentimes we get so obsessed with trying to pay off debt and I think that’s a good thing. But oftentimes we forget that we can add on new income streams. I yeah, and
Jason Hartman 49:27
let me comment on the debt thing for just a moment. If I may. And I know we’re kind of wrapping up here. We’ve been going a while but you know, one of the one of the things few people really understand you know, deeply and and my listeners do because I’ve talked about it for so so many prior episodes, but it’s it’s the idea that in an inflationary environment with and we both think we are going to see some significant inflation Okay, in an inflationary environment. Debt actually transfers wealth from level lenders to borrowers borrowers are actually enriched by debt, because they pay the debt back and cheaper, cheaper dollars. And if you look at what happened in the Weimer Republic, you know, where lenders, you know, and borrowers and the way they interacted together, you just see and then and then when you put the debt against a commodity that has universal need, and my love is real estate. And so you know, I love getting a 30 year mortgage below the rate of real inflation on low priced real estate, okay, that’s necessity housing, not luxury housing at all. And you know, that throws off cash flow the day I buy it, but then the debt is debased by inflation, I call this thing, I created a little trademark term, it’s a mouthful, it’s inflation induced debt destruction. And it’s, it’s just an amazing phenomenon. It’s like the hidden wealth creator. And then you have a commodity, like precious metals is a commodity, you know, because think of what little houses or apartment buildings are made of, they’re made of copper wire, that’s commodity lumber, concrete, petroleum products, glass, steel, you know, these are all things that are traded globally not indexed any one currency. And, you know, I just think that’s such a good equation. And then, you know, have some metals and some other things and preparedness, too, of course, but, but like, I wouldn’t totally rush to pay off debt unless it’s consumer debt. I like the mortgage debt, because that’s being paid by someone else. I don’t, I don’t pay my own real estate debt. My tenants, I
Jerry Robinson 51:32
think that’s a really good strategy. We mentioned that to the one caveat with that is to make sure that you know, your audience or whoever who follows that advice,
Jerry Robinson 51:42
locks it in on a fixed interest rate if,
Jason Hartman 51:44
oh, death most definitely never
Jerry Robinson 51:47
rates, because if you have an adjustable rate, it works against you, actually, you know, oh,
Jason Hartman 51:50
yeah, absolutely. Yeah, you’re gonna, you’re gonna get payment shock when, when the inflation finally does hit, and the rates go up. But, you know, who knows how long they’ll kick that can down the road? But yeah, I mean, you know, when you’re borrowing the, I’d say real inflation now, it’s always understated by the government. Real inflation now is probably, you know, six to 8%. Okay, in reality, although the government would have us believe it’s much lower, and so if you can borrow it four and a half percent for three decades, like someone takes out that mortgage today, they’re not gonna make the last payment, or I should say, their tenants not gonna make the last payment. Until 2044. Do you think you know how much inflation we’ll probably see in the next three? Oh, sure. It’s
Jerry Robinson 52:34
even you know, Jason, I mean, you know, I’m an economist, I do a lot of investing on a real estate investor, and real people who are
Jason Hartman 52:41
people I didn’t know that I’m glad to hear it. You’re like,
Jerry Robinson 52:44
sure. And it’s one of our income streams that we love, you know, and we’ve built many different income streams and I love rental real estate. And I love as you said, that 30 year mortgage, I would take a 40 or 50 year mortgage I’m
Jason Hartman 52:56
Oh, I take a 200 year if I could.
Jerry Robinson 52:59
Yeah, that’s a great goal and like Dave Ramsey and other people who say don’t have don’t have any debt at all, but but we but we do like the whole concept of real estate. But many people today as you will know are very happy to borrow as much as they possibly can some of the wealthiest people I know are borrowing to the hilt at fixed interest rates.
Jason Hartman 53:19
Oh yeah. Yeah. And and borrowing specifically against a commodity that has universal need like how exactly you know that’s that’s a great deal and and of course it’s the most tax favored asset in America too. And you know, we don’t even have time to go into that one but you know, taxes are you know, the modern version of slavery so Oh sure. Yeah, yeah. If you if you want to really lower your tax bill own a lot of long term buy and hold income bribery, just just prudent, non sexy boring stuff and in markets that don’t make the headlines it’s not gonna be Southern California you know, it’s gonna be you know, your own stuff in Texas and Georgia and Tennessee. You know, these are great markets we love Well, you
Jerry Robinson 54:01
know, many of the things that we teach over on our website include things like options trading for people who you know, maybe want to do that rental real estate for sure. We also talk about affiliate marketing I mean, we have again we 22 different income streams so you know, anybody out anybody who out there who’s just wanting to add another income stream on you know, that’s that’s what we love to do. We’d love to help
Jason Hartman 54:20
Yeah, yeah, good stuff. Good stuff. Really, really good. Jerry give out your website again. Yeah, it’s f t m, like follow the money FTM daily.com. And just remember from the Nixon Watergate days, Deep Throat said follow them. So So there you go. Yeah. Yeah, good stuff. And the book is on Amazon with four and a half stars, good reviews, and any closing thoughts,
Jerry Robinson 54:45
I would just tell people to you know, really keep their eyes open right now. This is a you know, I expect the market overall to probably do fairly well as we head into the end of the year and as we head into the next year, this is historically from the stock traders Almanac and from everything, all the investment In all the different cycles that we’ve studied, this is usually the best time to be in the market this third and fourth year of a presidential election or kandacy. And the presidential cycle. And so the third and fourth year are often great times to be in the market. We also offer at our website, a market barometer, we were able to step aside and get out of the market before the before the collapse. And I really do pride our system on catching that I expect to see another major collapse. I don’t expect it to come, you know, within the next year, I think it’s we’re still a couple of years out. But we but we don’t really guess at that we have a system that tells us called our market barometer. And it has a great track record going back all the way to the 1929. crash, we back tested it. And so people who want you know, maybe have money in a 401k or an IRA, and they say, you know, I don’t want to sit through another one of these major collapses. Well, we have a market barometer that is available on our website that people should definitely check out. It’s it’s a,
Jason Hartman 55:57
Jerry, Jerry, I got to say, I’m a little surprised that you’re a stock market fan. You know, I call it the modern version of organized crime. Yeah. And, and you know, a conservative guy like you, I would think that you wouldn’t be too in favor of the stock market, the
Jerry Robinson 56:10
stock market has been really good to me, because I’m a Trend Trader. And so I trade with the trend. And so when the market goes down, I make money. And when the market goes up, I make money because I use options. And I use, you know, inverse ETFs and leveraged ETFs. And so it’s been really good to me. So it doesn’t really matter what the markets doing. I don’t really root for the market to go up. I just root for the market to move. Because if the market moves, I make money now when the markets stagnant and stays in kind of moves in a sideways motion. Okay, yeah, you’re right. It’s probably a bad place to be. But when it’s going up or when it’s going down, you know, I can’t complain. I like the market at that time.
Jason Hartman 56:44
Good stuff. Well, Jerry Robinson, thank you so much for joining us today. The book again is bankruptcy of our nation. And check it out on Amazon and all the usual places appreciate you joining us. It’s great to be here. Thanks, Jason.
Announcer 56:56
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