Jim Rickards: Washington Needs Inflation, Here's Who Pays

Speaker 1 Yeah, your dollar is like an ice cube melting in your hand. When China sells Treasuries or or lets them run off, which is, you know, economically the same thing. It's not because they're getting out of dollars. They wish they had more dollars. If you own gold futures or unallocated gold contracts with JP Morgan or options on gold or ETFs, you don't own gold, you have a contract. Speaker 2 All right, Washington can write a bigger check, but it can't rebuild a weapon stockpile overnight, and interest rates won't make a shipping lane safe. So when the usual tools aren't enough, what happens next? And who pays that? Today, Jim Rickers joins me on what Washington can still control, where China has leverage and what it all means for your money. I also want to know what he's buying that he'd still want to own if the crisis never comes. I'm Jeremy Safran. This is Kitco News. Speaker 1 In Focus with Jeremy Safran is presented by Calci Trade Gold and Silver Perpetual Futures 24/7 at calci.com. Speaker 2 Jim Rickards was the lawyer in the room when Wall Street rescued Long Term Capital Management in 1998. He's the author of Currency Wars and Money GPT. He added strategic intelligence. Jim, welcome back to Kitco. It's great to see you. Speaker 1 Thanks, Jeremy. Great to be with you. Speaker 2 I should also say happy belated birthday as well. I'd like to like to think that we do our research over here now you've said central bank support gold, but that they maybe they aren't enough on their own to send it much higher here. I mean, we've seen a little bit of a correction, but I guess on the buyer, I mean, who is the next big buyer and what finally makes them kind of act? Speaker 1 Well, you don't necessarily need a lot of buyers, obviously. You just need a higher price. They were all the central banks. The the turning point was 2010. So from 1970 to 2010, central banks were net sellers. The United States, believe it or not, sold 1000 tons in the 1970s, even after Nixon closed the gold window in the late 1990s, it was the UK's turn and they sold about half their gold at $250 an ounce. Believe it or not, so-called it was. Gordon Brown was the Chancellor of the Exchequer then. The so-called Brown's bottom. He actually picked the bottom of the market to sell their gold. On the early 2000s, we got the Swiss to do our dirty work. They sold about 1000 metric tons and then as late as 2010, the IMF sold 400 tons. We know about half of it went to India and a few other countries they never disclosed. The other half probably went to China. I think that's a a very good assumption, but that was it. 2010 was the year when central banks went from net sellers to net buyers and that has persisted ever since. The particular central banks change. It's not always the same ones. The big buyers, of course, Russia and China, they both had about 600 metric tons in 2009. Russia's over 2500, China's approaching 3000 metric times. That's what they tell you. The Russians are fairly transparent. I think those numbers are about right. China, we don't actually know. They have two holding companies, if you will. One is the central bank, People's Bank of China. They do publish their results and go to the website and they're the ones who say we have close to 3000 metric tons. Not quite, but they have another organization called the State Administration for Foreign Exchange. SAFE are safe for short. They have a lot of gold, pardon me, but they're completely non transparent. We don't know what's in there. So we're estimating it could be double. You can estimate when I say double, another 4000 tons, maybe less, but that would not shock anyone to, to learn that you can kind of estimate based on when you look at Swiss exports and Hong Kong imports, Hong Kong being a gateway to China, you can come up with some rough numbers. What we don't know, it's hard to ascertain is even if we know how much is going in, how much of that is safe or the central bank and how much of that is private consumption because the, the Chinese buy a lot of gold individually. I've been to China quite a few times. I've gone to some of these gold boutiques. They're kind of interesting. They're open late, sometimes till midnight. And they've got, you know, hostesses dressed in silk dresses walking around with trays of gold. But they they do a business, but we don't quite know how much that is. So, so they're the big buyers. But Turkey has bought a lot of gold. Japan has increased its own ownership by 300 metric tons. That's another one where they probably had the gold all along but kept it off the books because they just showed up one day, 1/4 in the figures. As you know, you can't just, you know, good luck calling up JP Morgan and trying to buy 300 metric tons every night. It's impossible to do. You can acquire it over time and, you know, so much per month, but when you see it show up all at once, it pretty much tells you they had the gold and they just, you know, did some accounting entries and moved it over to the central bank in a more transparent format. Iran is another very big buyer of gold. We we have, we don't know how much other than what Obama dropped off on the runway about 7 or 8 years ago or 10 years ago, but they. That's one of the ways they're surviving all the economic sanctions. Yeah, they're kicked out of the dollar system. They don't have the currency. They're not getting oil export revenue, all true. But if you have gold, gold is money. You can use it to buy weapons, buy food, buy whatever you want. You have to maybe move it around physically, but it's not that difficult. And even even Vietnam is a big bar of gold. So, but what they do, Jeremy, and this is important, the central bank buying is not going to cause gold to go to the moon. It's not going to cause a spike. But what it does do, it establishes a floor. They're actually very savvy buyers. They don't chase the, you know, the mini spikes or whatever they, they look for a bottom or a certain kind of stability. Now is a, is a good time, for example. But that's really good news for investors because it creates what I call an asymmetric trade, meaning if you buy a say at current levels, you have all the upside, which I think is significant, but your downside is limited because the central banks are always there, as they say, buying and putting a floor under it. No guarantees, but it's kind of nice when if your downside is limited, your upside is unlimited. That's my my favorite kind of trade. Speaker 2 Yeah, Yeah. Well, you know, I got to ask you. I mean, central banks went from selling gold to wanting more of it as you kind of mentioned, you know, throughout those years, what would make the big pension funds and and other, you know, long term investors follow them. I mean, what are they waiting for? Speaker 1 Well, if you're talking about pension funds, endowments, you know, insurance companies, you can almost guarantee that they'll be the last ones in because they always are. Their allocations to gold are about 1 to 2% and some of them have none. If they, I'm not forecasting this, but if they only went from, let's just say 2% and that's high, that's, that's probably as high as, as good as it gets to 5%. There's not enough gold in the world at anywhere near these prices to satisfy that demand. That's the kind of thing that would take gold. Maybe it gets to $10,000 an ounce on its own. That's the kind of thing that would take it from 10,000 to 20,000 very quickly if they decide to jump in. But I'm, I'm not counting that, like I say, when, when the frenzy stage begins or these big gaps really start to pile up and then some of them will move in, but they tend to be followers, not leaders. The demand for gold right now will come, as I said, will continue to come from, from central banks. A lot of it's from, from individual buyers around the world. I always have my my Indian friends tease me because I, I always, I point out that India has about 500 metro tons of of gold in in the Reserve Bank of India and they say, Oh no Jim, you're all wrong. They have 15,000 tons. I was like, hold on. There are 15,000 tons of gold in India, but it's mostly owned by individuals. The central bank has about 500 tons. But I got back from India. I was there a long trip last year. If you've ever seen an Indian bride, they're just their wedding presents just adorned in gold chains. It's it's pretty of course, but that's their life savings. Those gold chains are for their children's education, down payment on a house, their own retirement, healthcare, etcetera. That's their savings account because they don't they don't trust the currency. They don't trust the, yeah, retail banking institutions and so forth. So, so yeah, that the, the Indian consumer is a, is a huge buyer again, Chinese consumers independent of the central bank. So that's where the the demand will come from. I was in Australia recently and this was so the last August, but gold had started its run from around the $1800 level up to 5400, which was the peak at the end of January. But we were well into that. And I was the guest of one of the major, well actually the the largest gold dealer gold refinery in Australia, a private ABC Bullion, but they were in the central business district of Sydney. They were lined up around the block to, to buy gold. So a lot of it does come from individuals. Speaker 2 You know, in that scenario, because you brought up a good point about the upside being able to access that now, I mean it does, does the gold owner actually gain purchasing power or or mainly preserve what they already have now? Because those are two different sides, you know, kinds of upside. Speaker 1 Yeah, you, it's mainly preserving wealth, but what's what's wrong with that in the world where we're getting higher inflation and you know, if you, if you're a dollar recipient, so you have pension, insurance payment and annuity, Social Security, any kind of fixed income in a dollar amount with the kind of inflation we're getting, you're always lagging, you're always losing money. Now some of those things are adjusted for inflation. Social Security gets adjusted every year, but that's after the fact they look at that the the any increase in Social Security payments in 2027 will be based on 2026 inflation. But inflation will I expect to continue and maybe get worse in 2027. So you're always slightly behind the curve goal will do a much better job of of keeping you ahead of that. And as I say, it has the kind of upside potential that's not directly In Sync with inflation. It can just kind of take on a life of its own. So, so yeah, it is good for that. It as far as money is concerned, I mean, it's not a currency, at least not today. I mean, whether we even if we went back to a gold standard, I'm, I'm not predicting a gold standard, but even if we did, it doesn't mean we'd be walking around with, you know, quarter oz rate gram gold coins in our pockets. And it just means that we'd have dollars that were tied to gold in some fashion. You can have a gold standard that way, but but as a store of wealth and as a way to well, you know, preserve wealth and and have upsides it, it serves very well. Having said that, gold is being used as money to beat sanctions, Russia, North Korea, Iran, I mentioned other countries as well. I've done quite a bit of work for this for the for the CIA and the national security community director of national intelligence. And we've always understood that gold is a pretty good way to to beat the sanctions because it's physical, non digital, can't be traced. If you get a gold bar and I'm sure you've seen 400 oz gold bars. I've been in quite a few vaults and they're heavy. I dropped you on my foot once, actually. Speaker 2 They are heavy. Speaker 1 They weigh about 28 lbs. Yeah, it's like a free weight, but but they have a bunch of stamps on them. They have, they'll have a serial number, they'll have the the assayer who determined it was gold, the refiner, the exact weight, I say 400 oz could be 398.7 oz, etcetera. That stuff's all stamped on the bar boy. A serial number stamped on a dollar bill. But all you have to do is melt it down and recast it and all that's gone. That, that that's the record keeping. It's gone and put, put new stamps on it. It's it's untraceable. It's a it's an element. A lot of there's some of these guys on Bloomberg keep calling it shiny rock. I say it's not a rock. It's a metal, get that straight. But it's but it's easy to be cast and it really is not traceable. So it's perfect for evading sanctions, and that's one of the big uses for today, particularly with regard to Iran. Speaker 2 Let me ask you a question on that. I mean, does that, does that make, you know, a country more independent or or just more dependent on the smaller group of countries willing to trade within it? I mean, for Iran, does does gold take leverage away from Washington and hand some of it to Beijing? Speaker 1 Yes, it, it well has its initially to Iran, but yeah, Iran could ship gold to China in exchange for weapons, drones, manufactured goods, semiconductors, etcetera. Can ship gold to Russia for weapons. Again, Russia's a major weapons supplier. I looked at the North Korean portfolio, the dossier. Russia can pay North Korea in gold for North Korean drones and North Korean missiles, etcetera. So yeah, there's a pretty lively market and again, it it completely escape sanctions and it's a way to it's one of the reasons gold, as I say, it has this floor may be illegal from the US perspective, but they don't care. I mean, we're we're with half this country. So, so, you know, all's fair. Speaker 2 Yeah, obviously. Is there an unintended kind of consequence here? I mean, Washington's trying to weaken Iran, but it is also strengthening China's hand by making Iran more dependent on Beijing. I mean, how does China use that leverage? Does it get cheaper oil? I mean better trade terms, political concessions that Iran otherwise wouldn't accept. Speaker 1 Yeah, it is a two way St. As they say, Iran buys weapons and manufactured goods and semiconductors from China, but China is the largest purchaser of Iranian oil. Now you run right into the the blockade of the Strait of Hormuz. Iran is trying to blockade the Strait. They've done a pretty good job so far. The latest reports are more tankers are getting through with U.S. military escorts, U.S. Navy escorts. But it doesn't, you know, as I say, Iran, Iran does not have the capacity to interdict every vessel that's trying to get through the Strait of Hormuz. They don't have much of a Navy, really. Nothing left except these speed boats, like kind of PT boats. And they don't have a Marine Corps that can go, you know, board the oil tanker and take it over. But they don't have to all that and they don't have to stop them all. All they have to do is blow up an oil tanker once or twice a week and that's enough to shut down traffic in the Strait of Hormuz because nobody wants to be next. I mean, if you're, if you own the, if you own a vessel, you own the cargo Vessels, you know, are owned by one group. The cargo's trade separately. The, the cargo's actually trade while the vessel's underway. They just, you know, sell it to somebody and call the captain and say go to Houston instead of Rotterdam, as the case may be. You're the insurance company or you're just the captain and you care about your crew and you don't want your people to get killed. Do you want to? You know, it's dirty, Harry said. You know, do you feel lucky? I mean, do you want to? Maybe you'll get to the straight up Hormuz, but maybe not. It doesn't take much to shut it down. The other reason oil is getting out right now there's a pipeline from eastern Saudi Arabia, which is where the oil fields are across the peninsula that comes out in the Red Sea near a place called Yambu. Well, OK, that was I was transporting 3 to 5 million barrels a day. Now sorry, really typically exports closer to 20 million barrels a day. When the straight of them was got choked off, they went to this pipeline and and increased its capacity or the OR the flow through and we're not quite to 5 million barrels a day, about 3 million barrels a day. Well, the IT was blown up by forces in Iraq. Now, the the forces were allied with Iran. They were Iranian proxies, but they blew up the pipeline. Well, it just announced yesterday that Saudi Arabia repaired it and they're getting ready to start using it again. Sounds good, but what's stopping the hoodies or the Iraqis from blowing it up again? And they probably will. So, yeah, things are getting better in terms of oil output. By the way, oil is not a big problem globally right now. The price is higher and there are shortages. But we don't put crude oil in our gas tanks. We put gasoline. That's really the refined products that are short supply gasoline, kerosene, which is jet fuel, diesel. They're the they're the big three. They don't come out of the ground, they come out of refineries. Well, a lot of the refineries are in Russia, but they're being bombed or attacked with drones coming from Ukraine with help from the United States in terms of targeting, surveillance, satellite imaging, etcetera. So you see Trump complaining about, you know, Trump said publicly he wanted the Ukrainians to stop attacking Russian refineries because it was driving up the price of diesel, which effects farmers in Iowa. And you got a close Senate race going on in Iowa. So it's kind of all connected. And I, I've said, you know, elsewhere, well, fine. If you want to stop the Ukrainians from attacking Russian refineries, the United States, why don't you stop giving the Ukrainians intelligence and GPS coordinates and surveillance and all the other, plus the drones themselves and all the other information they need to do it. So we're sort of talking out of both sides of our mouth. We don't want the Russian refineries attacked, but we're giving the cranes all, all the tools they need to do it. So I it's hard to make sense out of that. Speaker 2 You know, I just want to go a little further on there because to your point, I mean, the shooting in Hormuz hasn't stopped. I mean maritime British, I think of Britain's maritime agency reported three more tankers, I mean struck this week. So JP Morgan this morning, they did say crude exports from the region are back to 98% of pre war levels. But to your point, I mean to refine products like diesel and glass gasoline are only about 58%. So I mean, Jim, can, can markets learn to live with this war or they just missing a cost that just hasn't shown up yet? Speaker 1 Both, I mean, they can learn to live with it. But to to your point, Jeremy, at what price? And So what it what will the price of diesel be? Now there's something called down to get to in the ways, but something called the crack spread. Now the crack spread is basically the difference between you do a barrel equivalent. So the difference between a barrel of crude oil and a a barrel of refined product, I'll say diesel because diesel is the most important. What is that? What is that spread? Again, on barrel equivalent basis, it's normally around $20. That would be, you know how much more you would pay to get the refined product. Today it's over $100. It's an all time high. Now if you work backwards, OK, let's look at the price of diesel at about $200 a barrel and then subtract 20, which is the normal crack spread. What that tells you is that a barrel of crude oil is actually worth $180 a barrel. Now I know that. Brent crude is about about 9798 today. It's been just a little bit over 100 in recent days. West TX intermediate a little bit lower, but you know kind of in the mid 90s. But but those again people don't understand this necessarily. Those are futures contracts and futures contracts settle one to two months forward #1 and #2 they're not predictions. They're it's a weighted average of all the bets. Some people are betting higher, some people are betting lower. You buy and sell your contracts as the case may be and the price comes out and as I say in the mid to high 90s where it is right now. But those are bets weighted average bet of where people think oil is going to be two months from now when the contract settles. Well, that's not where it is today. If you if you want a wet cargo, you want an oil tanker filled with oil on the seas that can deliver to your refinery right now. And there are brokers who do this, call them up. That oil's running 130 a $140 a barrel, which is much closer to that hypothetical $180 a barrel that we got to by working backwards from the crack spread minus the normal difference. So the point is that actual crude oil that is deliverable on, you know, in a vessel on the water that's, you know, in the range of 140 to 180, a $180 a barrel, not 98, which is what you see on the futures contract. So it actually is quite high. But it it, I just happened to have an event this past weekend and had, you know, 100 or so visitors from from around the world. And I was wishing everyone, you know, well, and the number of people who said, hey, Jim, my flight was cancelled because they didn't have fuel usually like mechanical difficulties or pilot or whatever. They said, no, they didn't. They couldn't feel the plane. Other people sit and they switched into a different airline or other people said, yeah, we took off, but we had to stop, you know, halfway across the country to refuel. That's because they didn't have enough diesel when they or sorry, kerosene or jet fuel when they took off or, or, or ran or couldn't fill it up to begin with. So those jet fuel shortages are are showing up in real time. This is not some future problem, it's a problem right now. Speaker 2 And if the fighting stopped tomorrow, I mean, would that gap that we were talking about close quickly or has enough refining capacity been damaged that consumers would keep paying long after the shooting stops? Speaker 1 Yeah, the the, the refinery constraint is real. The US, the last new refinery in the United States is built in 1979 and they're running at right now, they're all running at 100% capacity, which you actually can't do. I mean, you can do it for a short period of time, but if you run it, it's like, you know, running your car at 8000 RPM. I mean, you can redline it, but good luck staying there. My point being, equipment will start to breakdown, engines will start to burn out of set, or you have to run it at a lower level in order to make it sustainable. So yeah, everyone's working flat out right now, but it it's not sustainable. So the shortage is already exist as I described. So no, we won't be. We won't be over quickly. What They're huge logistical hurdles along the lines we described. But where it affects everyday Americans is in the price inflation. The thing with diesel, like, hey, I put gasoline in my car. I don't put diesel in my car. Well, fine, but every single thing you buy either at the store, on the shelf, or delivered to your porch arise by truck at some stage. And trucks run on diesel. So when diesel prices are higher, that gets passed along into the price of everything because it all moves by truck. The truckers aren't going to eat the increase. They're going to pass along to the shippers and they're going to pass along to the retail outlets. So higher diesel prices mean higher prices for everything you buy. And that, that is why the, and that will persist. And that's why the inflation will persist, which it, it, it's good for gold. Inflation is so the correlation between inflation and higher gold prices, it's real, but it's less powerful than most people think. The real drivers of gold prices are things like geopolitical risk, fear of the US confiscating your Treasury securities, and, you know, a weak dollar for other reasons. Those are the things that really get people buying gold. Speaker 2 I got to ask you, I mean, let's bring it back to the wallet for the people watching at home too, because Americans saw this new data this morning. Americans spent .6% more in August after inflation, the biggest jump in more than one year according to the Commerce Department. But their income after inflation didn't grow. And in September, consumer confidence fell to its lowest level since 2014. So which is it here, Jim? I mean, are Americans doing better than they feel? Speaker 1 Well, I'm, I'm glad you said real incomes after inflation, because that gets glossed over that first of all, you're right. But it gets glossed over because a lot of the mainstream media will say, you know, incomes went up, you know, more than inflation. But those numbers are nominal. They are not adjusted for inflation. The ones that the Bureau of Labor Statistics reports are not adjusted for inflation. Now you can do it yourself. It's pretty simple, just take the numbers, subtract the inflation rate, although there are 15 different inflation rates, depending whether it's, you know, PCE core, non core, super core. We don't need to get into all that, but pick an inflation rate that's reasonable and subtract it. And you'll find that real incomes or inflation adjusted incomes are not keeping up with with other, you know, with deflation, well, with the cost of living basically. So, so that, so that's right though. But then you'll hear. So that's the so-called affordability crisis. It's, you know, gas prices are higher, diesel prices are higher, interest rates are higher. If you're getting home mortgage, they're back up over 7%. That's all true. Those numbers bear out. But then that's those are the Democrat talking points going into the election. In the midterm elections, the Republicans will say, hold on, you know, unemployment's quite low, which it is. The stock markets are, you know, off a little bit, but they're kind of not far from all time highs, which which is true. GDP is expanding at the highest rate in years over 10 years, which is also true. So everything's great. So and the question is, which is it? You know, I can give you a bunch of data that points in two opposite directions. This is the, I hate to use cliches, but sometimes they they're accurate. This is the so-called K shaped economy. You know the L, it goes down and stays there. EU, it goes down once along the bottom for a while, it goes back up again. The West is back-to-back recessions. We had that 1980 and 81. So people have all these, you know, the V is down sharp, up sharp. So people have all these letters, but the the K shaped economy is too completely different economies depending on whom you are. So if you have assets, home prices are going up, stocks are going up, gold has been going up, you know with dividends have been been going up etcetera, IP OS are on the horizon. So if you have assets and you have inflation hedges, OK, inflation's not great. In fact, it's pretty bad. But there are ways to hedge against inflation and you know, gold being one of them. So you could be doing OK. On the other hand, if you're, you know, particularly people in their 20s, you know, but even people in their 30s and 40s, but definitely people in their 20s, heavy student loan debt, they can't save because, you know, because you know, they can't get really good high, high paying jobs. You know, you're barista, you're an Uber driver. I mean, there's dignity in all work. I'm not, I'm not disparaging any form of work, But there is a difference between the so-called gig economy and you know, what used to be high paying union jobs with benefits, etcetera. Those are the ones that have been been disappearing. So you end up, you know, you're, you're living in your parents spare bedroom. You, you can't pay off your student loan debt. You can't save to buy a house. You don't want to get married because you've got no place to live, you know, etcetera. Well, those people are in bad shape and they're rightly, I would say, not just depressed. They're a little angry about the situation because they kind of went to college and do what you're supposed to do. They're the ones, not all of them, I don't want to over generalize, but they're the ones joining the Democratic Socialists of America or supporting their candidates who are winning a lot of races. By the way, I, I tell people, you know, when you say Democrat Socialist of America, socialist is a branding exercise, they're communist. And when I say that, it's not name calling. That's what they call themselves. Go to the DSA Democrat Socialist of America, go to their website, look at their platform. They say, hey, we're communist. I mean, the masks are off. They're not hiding it. And that actually has a lot of appeal because a lot of these, you know, I'd say people graduate from College in the last 1520 years. I don't they, I don't know when they stopped teaching, you know, geography and history and a lot of other things, but they sure teach ideology and Marxism, you know, in kind of dressed up form. So now you can debate that, you can criticize it, but you shouldn't be surprised by it given the fact that they're on the down leg of the K So you got people on the up leg of the K, they're doing fine, people on the down leg of the K not doing fine. And it really is a tale of two economies. Speaker 2 Yeah, Yeah. What's the free market kind of answer to that frustration you're talking about if someone works, pays their bills, still can't get to the point of owning assets? I mean what what what would you change first to give give them a kind of a way in? Speaker 1 Well, there is no free market solution because there is no free market. That's one of those cliches. People like to throw it out there at me. Yeah, we have freer markets and and I yeah, yeah, we should. I absolutely support market economies and they have efficiencies and they give you prices kept they give you a lot of good things. But you know, take the Tesla for example. I, I happen to have lived in a couple, I'll just say high income zip codes. So I have more. I encounter more than my share of Teslas and every time I see one I want to pull the driver over and get my $7000 back. Because they gave them $7000 in credits, not deductions, credits dollar for dollar to buy the Tesla. Huge government subsidy. They would scarcely been affordable without it. I'm a taxpayer so I'm paying those Subs. I don't have a Tesla. I'm I'm like hey buy whatever car you want and if Eli must make whatever car you want. But when you throw a $7000 per vehicle subsidy on it, don't tell me that's a free market. It's not. And so I could give you many other examples. So I think you're the real, the important part of your question, Jeremy, is what leaving aside all those, you know, footnotes or conditions or constraints on supposedly free markets, what would the best policy be? I think I would start with the Student Loans because it's huge. It's, it's getting close to $2 trillion. Last time I checked was, was about $1.6 trillion per student. So I, I know, you know, my, my, my kids are, well, they're in their, you know, 40s and 30s, but they certainly have, I know younger people and they have a lot of friends. These people have $100,000, a $150,000 in loans. Some of them are higher. The interest is accruing and they got holidays or forgiveness during the Biden administration. A lot of that has been reversed under the Trump administration. What wasn't reversed is like, well, OK, your, your holiday's up now. You got to pay back your loans and they can't do it. I'm not I'm not saying, I mean, it's the law, it's the deal, it's the Contra. I understand all that. I'm a lawyer among other things. I get it. But don't think that you can run that policy and get the kind of economy you're looking for, at least from that cohort. So I would give student loan, if not outright forgiveness. It reduced interest rates, longer maturities, maybe some forgiveness in exchange for taking educational programs that actually are productive. Not, you know, gender studies in frogs or whatever, but you know, a welder, a Carpenter, a, you know, a landscaper, metal worker, steel worker, vocational type education or education, science, technology, mathematics, where you can apply yourself and you know, join the AI revolution, etcetera. So let's let's offer those programs and let's say to people in their 20s and 30s, get one of these degrees, we'll subsidized your tuition and forgive your student loans. In exchange, we, the United States and the taxpayers get a much more productive, capable citizen. Whether you go into the vocational blue collar route, which is fine. And you know, try getting a try getting a good plumber or or a Carpenter or a woodworker these days, you know, good luck that that would be, that would be a fair trade. That would be, we'd be giving up dollars, not spending dollars by the way, but writing some off. And that does affect the budget deficit, but writing some up. But in exchange we'd be getting people signing up for much more productive educational program. Education is the key to everything. If you've been, if you got an ideological indoctrination, you can't offer very much. But the kind of program I'm talking about, you probably could. Speaker 2 You know, has it surprised you? Has it surprised you how much appeal socialism and being kind of that greater government control has gained, particularly among younger people? Because I want to talk about the trap in that promise. I mean, if the frustration pushes voters towards more government ownership and control, what's the economic bill, Jim? I mean, who ends up paying for it, including the people those policies are supposed to help? Speaker 1 Well, if you ask me whether again, I'm I'm being polite by calling it socialism, it really is communism or neo Marxism if you like, you know, sort of the Antonio Gramsci version from the early 20th century. But if you ask me if it works, the answer is absolutely not. But if you ask me, am I surprised as popular? The answer is no. I'm not surprised partly for the reasons we discussed, but they the really a generation or really kind of two generations at this point, they've been indoctrinated. I mean, if you're sitting in a classroom and instead of learning the kinds of things we were just talking about, I'm telling you that, you know, capital is concentrated and exploits labour and labour produces surplus profits and the capitalist takes them and deprives the worker. And you know, we need to have, you know, wealth taxes. They're talking about wealth taxes, not they are. They do want higher income taxes, yes, but their, their platform. And again, this is publicly available. It calls for a wealth tax. It's a wealth tax. They don't tax you on your income. They tax you on what you have, your actual stocks, real estate, other assets, etcetera. They take a slice of that. They're getting very close to making this the law in California. And they always start out saying, oh, it's only 1% and it's only on the billionaires. Yeah. And give it like 3 years, it'll be 5% on everybody making more than, you know, with net worth of more than that, you know, 200 grand or something like that. Well, that is confiscation of property. And call it whatever you want, but that's what they're doing. Karl Marx wrote thousands of pages. I mean, it's DOS Capital or Capital is several 1000 pages, depending on your edition. He wrote a lot more, but he was asked once, hey, take everything you've done, all your economic philosophy and really heterodox economic doctrine end up being called Marxism and reduce it to one sentence. What would you say? And he said the abolition of private property. That's it, you know, and we we all know kind of where that goes. Well, that's what that's what they're, that's what a wealth tax is. It's the first step in the direction of the abolition of private property. Will it work? No. Is it destructive? Yes. But don't be surprised to see it coming. Well, it is coming. We don't have to guess anymore and don't be surprised to see a gain a lot of adherence because there are a lot of people who just don't have a stake. That's just the capitalist system, if you want to call it that. But they don't have a stake in the in the rule of law or the OR the property owning system. They don't have any property. Speaker 2 That brings us to the Fed because you called the Fed's last move or I guess hike, you know, kind of a blunder. Traders aren't betting on a reversal. I mean, I'm looking at Cal she the odds of another hike in October fell from 67% to about 40 in a day, but December 74%. So I mean, what are your thoughts here? Should they reverse it? Where? Where are we at? Speaker 1 Well, I have to separate my my own policy recommendations from what they're actually going to do. They're often two different things. So I, I think they should reverse it, but they're not going to. So at the October meeting, they're going to stand pat. They're not going to raise rates. They got that behind them at the September meeting. Remember that the next meeting I think is October 29th. It could be off by a day, but I think, I think it's the 29th. The election's November 3rd. So on Tuesday and the, I think the meeting's Thursday, October 29th, if I'm not mistaken. Are you actually going to raise interest rates four days ahead of the election? I mean, Trump would get up, walk over the Fed, go down, you know, Constitution Ave. and burn down the Fed. So they're not going to do that. They're the idea that they're independent is a joke. The idea that they're not political is a joke. They're, they're, they're not, they're not independent. They can be independent of the White House when they feel like it, but they're working at the behest of some pressure group or some consensus of economists or other central bankers, etcetera. You know, of course they'll they'll talk to each other. But no, that would be, you know, sticking your hand in a fan, so to speak. So they're not going to do it. But then there's a meeting in December, around the middle of December, I think it's the 18th or so. And they'll probably raise it then. The inflation numbers are not great. And beyond that, people say, well, let's say let's just say inflation comes down. Let me be careful about, you know what I mean by that. So if inflation is because the PC number came out today, so if inflation goes from 3.7% to 3.4%, the New York Times will say inflation came down. Well, technically it did, but it's still inflation. That's the point. Prices didn't come down, prices didn't go negative. We don't have deflation. All it means is that your prices are still going up, but they're going up at a slower pace. But they're still going up #1 #2 all that past inflation is still there. It never went away and it wasn't that long ago. I mean, June 2022, inflation annualized on a year over year basis with 9.1 percent, 9.1. That was the highest in 40 years. You have to go back to the early 1980s to find higher inflation figures. And I was around that. And I, I remember what that was like, you know, in my first mortgage, it's around 1980, my first mortgage was 13%. And I, I told my mother and she cried and her first mortgage was like 2 1/2 percent or something. But, but I said, Mom, yeah, my mortgage is 13%, but inflation was 15%. So my real rate was -2 and it was deductible in the 50% bracket. So my real rate was like -8 So I was like, they were paying me to borrow money. So you have to put all that in context, but. Speaker 2 That's a good point. Inflation numbers slowing inflation doesn't undo the price increase families have already observed, right? I mean, even if the Fed gets back to 2%, it doesn't restore their old purchasing power. So I mean, what? What actually repairs that damage? Is it prices coming down? Is it incomes finally changing up? Speaker 1 Nothing repairs, but what, what repairs the, you know, this is the debasement narrative, which I always said was wrong. By the way, the dollar is getting stronger that you know, yours down from 116 to 113. So don't talk to me about the end of the dollar. The dollar is doing fine, but you know, as far as that's concerned. But the the point is that who says the government doesn't want inflation? I mean, publicly they say that, but what what you need to make the debt sustainable. People say they're banging the table. We're never, we're never going to pay off the national debt. Well, of course not. You don't have to pay off the national debt. We're not going to pay off the national debt. What you have to do is roll it over at a reasonable interest rate. That's that's a challenge, but it's not the same as paying off the national debt. We got to get the deficits to go away. Sorry, deficits are not going away. They're here to stay. So we're going to have higher debt and we're going to have deficits. The question is how do you make that sustainable? How do you get the market to sort of help you and roll it over? Well, the answer is the key metric is the debt to GDP ratio. What is the national debt divided by GDP? That's a number. And then the answer to it right now that's about 125%, you know, give or take. First of all, that's high. It's dangerously high, but we've been there before. In 1945, the debt to GDP ratio was about 120%, a little bit lower. By 1980, the debt to GDP ratio was 30%. How did we get it from 120% to 30% in 35 years? Well, it wasn't the debt. The debt went up three times and it wasn't the deficit. The size of the deficit tripled. What grew was the GDP. But when you're talking about debt, you're not talking about real GDP. Real GDP is important. Real numbers are important. You're talking about nominal GDP. Nominal GDP is real GDP plus inflation. From 1977 to 1981, US inflation was 50%, five zero. So in that 35 year period, from 1945 to 1980, the GDP grew, sorry, nominal GDP, to be clear, grew 10 times. It grew 1000%. So in other words, the debt went up and the deficit went up, but GDP went up faster and that lowered the ratio, which made it sustainable. But let's not lose sight of the fact that a lot of that faster growth in GDP was inflation. That's the key to the whole thing. And by the way, one very good reason to own gold. Speaker 2 I mean, let's the bond market gets a vote here, right? I mean, inflation helps shrink the debt relative to the economy, but lenders demand those higher interest rates as the debt rolls over, as you kind of mentioned. I mean, how much has Washington actually gained? I mean, what? What keeps the interest bill from eating up the benefit? Speaker 1 Inflation and then that. And that's, that's what we were just talking about. So yeah, you're, if, if you're, again, it all comes down to nominal GDP. I mean, inflation actually favors the debtor. Inflation if you're the creditor, inflation's the worst thing that can happen to you because your dollars are worth less. But if you're the debtor, you love inflation because you owe the same nominal amount of dollars, but they're worth less. It's like, hey, here's, you know, here's your trillion dollars back. Good luck buying a loaf of bread. So inflation favors the debtor. Who's the biggest debtor in the world? It's the United States of America. Speaker 2 It's interesting. I mean, there's like, there's, there's the conflict there, right? The saver needs inflation under control. The government, the biggest debtor, benefits from some of that debt being inflated away. I mean, what stops the government's interest from winning out over the savers? Speaker 1 Not much. And by the way, you know, if inflation went to 3% right now, you know, the White House would be popping champagne forks and all that. I'm sorry, 3% inflation cuts the value of the dollar in half in about 24 years. So and then half again in another 24 years. So in 48 years, this got a typical career from age, you know, 25 to age, you know, early 60s or whatever. 3% inflation, just three will cut the value of the dollar in half by 75%. If you start talking 4 or 5% inflation, forget it. Your, you know, your dollar is like an ice cube melting in your hand. So it doesn't, we don't, it doesn't take 10% inflation. I mean, that's, that's brutal. Well, it doesn't take 10% inflation to make the value of the, of the, of the dollar go down a lot. 3% does just fine over the course of a typical career. So again, you can have big winners in inflation. I got through the 70s, you know, we, we did fine. But how do you do it? Well, the answer is you own real estate, gold, silver, you own again various kinds of hard assets and and your your assets go up in value even as your dollars are worth less. Your assets are going up and that's how you survive. The victims are the people who don't have assets. We talked about those or people on fixed incomes of various kinds where they can't make the adjustment. Speaker 2 Elections 5 weeks out, government funding runs dry by December 11th. I mean what should investors be watching between now and then realistically here? I mean, what can change? I mean, can Washington realistically change anything about how this economy feels before people vote? Speaker 1 Not really. Not. The war in Iran will not be over. Prices will not come down. The war in Ukraine is getting worse for the Ukrainians. I've said all along the Russians are going to win. They, the people don't understand the Russian way of war. It's very slow, very methodical and entirely lethal. But so the Russians are doing it their way, but they're they're winning. So, you know, and diesel prices, if it came down a little bit, maybe, but but I don't expect that. So nothing much is going to change. What will change is the Republicans have a huge money advantage and they're prepared to spend upwards of a billion dollars in a variety of races. And the Democrats don't have anywhere near that amount of money. So I think you'll see, you know, for example, they're going to spend over $100 million in Texas on this Paxton Talarica race. So I I think the Republicans will keep the Senate, but they'll do it partly on the basis of spending a billion dollars where they need it. Speaker 2 I wanted to ask you a little bit more on China as well, because I mean, Beijing's shrinking a pile of American IO US. As you know, the Treasury holdings are down about 618 billion, the lowest since 2008 at central banks, added, I think for 22 straight months. And Chinese buyers imported over 11141 tons, according to Harrius. Now, I know that we've talked about safe, you know, some of those reserves out there. Nobody really knows. And you've argued, obviously, that the dollar isn't losing its crown. So what can China do to loosen Washington's grip here? Speaker 1 Well, I think they're, they're doing it in part by selling the treasuries. But I, but that's really a misunderstood. Now that we have the data, the, the, the United States Treasury publishes the tick report every month. And it's a simple spreadsheet and you look at the major holders of U.S. Treasuries and you look at, you know, what they hold each month and by maturity, etcetera. So you can see the Chinese holdings of U.S. Treasuries going down and that's interpreted as part of this debasement trade. You know, they're dumping treasuries, they're getting out of the dollar, they're at the end of the dollar, etcetera, etcetera. No, that's not what's going on. They, they are reducing their holdings of treasuries. That's just a fact. But they, but here's the reason they're doing it because they're desperate for dollars. People don't understand they, they talk about the dollars of leading reserve currency. Reserves are not in currencies, they're in securities. And there's a big difference. So China holds the reserves, a big portion of them in U.S. Treasury securities. Now, they are denominated in dollars, That's correct. But they're not actually dollars. You can't do anything with them except, you know, all of them collect interest and get paid in maturity. If you want dollars, you have to sell the Treasury and get the dollars. And then what do they use the dollars for? They're using them to prop up their own currency because they don't want the cheaper you want because they have to buy a lot of inputs to keep their manufacturing going and to prop up their banks, which have a lot of dollar denominated loans that are going bad. So when China sells treasuries or or lets them run off, which is, you know, economically the same thing, it's not because they're getting out of dollars they wish they had more dollars. It's because they need they need currency, not securities, to prop up their own system. So it's actually a sign of a global dollar shortage and a Chinese weakness, rather than any weakness on the part of the United States. Speaker 2 So I mean, what leverage does that leave Washington with? Speaker 1 Well, the Japanese until recently had been buying a lot of the additional securities. Now, now we're in the unwind of the Japanese carry trade, which is a different problem, actually a much bigger problem, which basically the carry trade is I'm AUS investor. It could be Europe or Switzerland or any place, but I'm AUS investor. I want to borrow dollars to make an investment by a company, build a plant. But Japanese interest rates are way lower than US interest rates. So what do I do? You borrow yen, you swap the yen for dollars, you invest the dollars and you get dollar returns, 7810 percent, maybe a lot higher if you leverage it 3 to 1 like a hedge fund or 12:50 like a real estate developer or whatever. But you're paying. We were paying close to 0 over here. So the spread alone, independent of the gain on the investment, just the spread between your financing costs and your returns is huge. Sounds good. And by the way, that's been going on for 30 years. And that yen carry trade basically was Japan financing in the world. It wasn't just US investors, it was, you know, Germany investment in China, Brazil, all over the world. It's really been the engine of global investment because you have these cheap financing costs. So sounds good. What could go wrong? Well, what could go wrong is when Japanese interest rates start to go up and they are the, the, the yield of maturity on the 10 year JGB Japanese government bond is now over 3%. I think for the first time in, I want to say 30 years, maybe a little bit longer than that. But and so therefore the spread between US rates and, and start between US rates and, and Japanese rates is shrinking. And so that makes the carrier trade less profitable. Now it's still profitable, but if you're watching that happen and you're savvy, you're saying, hey, this is going to get worse. Japanese interest rates are going to go higher, which they are. And so there's going to be a run for the excess. I want to get out of this trade before the Stampede begins. How do you do that? The one, one way to do it is to borrow, borrow dollars, buy yen, pay back your yen loan and now you're just dollar, dollar asset liability. That works. But what if the bank won't lend to you or you don't have the credit worthiness, so you're too highly leveraged etcetera? Well, then what you do is you sell assets. OK, well, but that can start a complete cascade where all of a sudden you're selling stocks and trying to unload private equity and selling real estate. And that could cause collapses in multiple, multiple markets. So the sunlight of the Japanese carry trade is extremely dangerous, can lead to a global financial Stampede or panic. It's starting now. So what what has the Treasury done about it? Well, Scott Besson, who he was part of the team that broke the Bank of England in 1992, so he gets this. He has, he has started giving the Japanese dollars so that they can prop up the yen without selling U.S. Treasuries. So, So the Japanese were selling Treasuries to get dollars to prop up the yen. Scott Besson said, hey, here's a boatload of dollars. You can prop up your currency and you don't need to sell U.S. Treasuries. Why? Because selling U.S. Treasuries raises US interest rates for one month from the election that the White House doesn't want higher US interest rates ahead of the election and getting them anyway. But basically he was trying to prop up Japan and and make it easier for the Bank of Japan not to sell U.S. Treasuries. Now, will that work in the short run? Maybe we'll work in the long run. No, it never does. When you're, you know, Scott Besson, I think it was just kind of, he's a smart guy with kind of a dumb thing to say. He said, you know, he said all the hedge funds, everybody, you know, you're on the House and on the Treasury. I can, I can get all the dollars I want. So you're betting against the house. He was wrong about that because the House is not the Treasury, it's the market. It's one thing bigger than the US Treasury, it's the market as a whole, and that's who's betting against the Treasury. He should know because he did break the Bank of Bank on, but these things never work in the long run. Speaker 2 Yeah, Yeah. So, I mean, they it could help Japan avoid selling Treasuries. But doesn't a stronger yen also squeeze the investors who borrowed yen to kind of buy those American assets? I mean, could, could could Washington do something here? What what are your thoughts? Like at what point does the Fed have to step in right? And and could that stop that selling cascade without abandoning its flight for inflation, I guess? Speaker 1 Well, the Fed, the Fed can monetize the debt. They, they can buy the debt whenever they want and but it's QE basically. One thing the research shows is a QE does not work. It's not stimulus. Lower interest rates are not stimulus. By the way, a really healthy economy, like an economy that's growing in real terms and unemployment's going down and jobs are being created, Interest rates should be five, 6%. That's, that's what a healthy economy looks like. When you see an economy with 1% interest rates or 0% interest rates, that's a sick economy. That's what we had during the Great Depression. So, you know, Trump and Trump's, he's a real estate guy. He's completely wrong about that. To suggest that, you know, taking interest rates down to, you know, three, 2 1/2 or 2% is stimulus. It's not stimulus. It's the opposite. It it tells you that the economy is kind of sick. Speaker 2 Now, like what did the intervention actually fix? Did it, did it remove the pressure or just by Japan time? What has to kind of change so Washington doesn't have to keep doing it? Speaker 1 Well, everything. I mean, they, they, you know, you've got to say, I want Japanese interest rates lower. Well, the Japanese interest rates are not going to be lower because the Japanese have their own inflation problem. They have a new Prime Minister, a new finance minister. So they don't want that to get out of control. So they're going to keep doing it. They're going to keep raising interest rates to help prop up the yen, make the yen stronger at least and and they've had they've had a little bit of success doing this, by the way, in the past month. My point is that you can have short term success, but it won't last for the long term. It's just too big. So well, one thing that would cure the inflation is the recession. You know, if you get, if the AI bubble burst, which I expect it will, and if you know higher, you know, they said the cure for high oil prices is high oil prices. If they're high enough, long enough, you'll destroy consumption because the demand for gas in your car is inelastic. So you got to fill up your car no matter what. That means you'll do less of something else. You won't go out for dinner or entertainment or take a vacation and buy new clothes, whatever, whatever it is. So that'll hurt consumption because the demand for gasoline is inelastic. So that could lead to a recession, and then that would bring the inflation down, but then your unemployment would go up. So it's not there. There really aren't any good outcomes. We kind of paint ourselves into a corner here. Speaker 2 Yeah. Listen, we we've talked about China trying to reduce its financial dependence on on Washington as well. Let's finish with what an individual can actually control. I mean, for someone who owns gold, we kind of know the basics about protection that that ownership kind of gives them. What's the distinction between owning the gold, being able to access it, and being able to sell it when you need to? Speaker 1 Well, they're, they should all be the same. And I, I tell people if you own gold futures or unallocated gold contracts with JP Morgan or options on gold or ETFs, you don't own gold. You have a contract, OK, you have price exposure, you know, depending on the particular form, if you want to make a short term bet and price goes up, you, you win, you make some money, but you don't own gold. And when you most want your gold, when the situation is deteriorating rapidly and stock market's crashing and other things are, are collapsing and you say, well, not now is when I really want my gold. And you go to convert any of those contracts to physical gold, some of them. First of all, you can't. You cannot convert an ETF into physical gold. An authorized dealer can, but a retail investor cannot. Futures contracts. If you want to take delivery, good luck. If enough people do that, they will just suspend delivery. So then they can do that. I've I've actually enough of a geek. I've read all the rule books of all the exchanges. Every one of them has a rule saying that they can change the rules. They just have a Board of Governors meeting and you know, increase margin requirements or give an order trade for liquidation only, meaning you can unwind or roll over, but you can't actually get your gold. And they say we're not a source of supply and allocated gold forwards. They'll just send you a notice. So like, hey, we're terminating your contract. Here's your check. We're not stealing your profits. And you're like, wait a second, I don't want the money I want I want to stay in the contract. Sorry you're out, etcetera. So if you want. Access to physical gold. Buy physical gold, put in a safe place, hang on to it. You know, if you need to sell it down the road for dollars, you know you need a reliable dealer. That's that's can be easier said than done, but that's the way to actually own physical gold. Speaker 2 Yeah, you know, the one that keeps up the gold owners at night. And you know this well, I mean, Washington obviously throws Russia's reserves in 2022. Venezuela's gold has been stuck in Bank of England since 18. Could Washington ever do that to America's gold? Speaker 1 I would say no. And when you say the United States froze Russian reserves in 2022, that is true with regard to approximately $300 billion of U.S. Treasury securities that were on deposit at Euroclear in Brussels. They did not get the Russian gold. Theora Naviolina, who's the head of the Central Bank of Russia, like to say she's the only central banker in the world who really understands her job. She spent 10 years from 2009 to, you know, beyond 2019, increasing Russia's gold reserves, as I mentioned, from 600 tons to about over 2500 tons. But at the start of the special military operation in Ukraine in 2022, Russia had 25% of its reserves in gold, physical gold stored in Russia, not at the Bank of England. And so their their total reserves were about $600 billion and 150 billion or 25% of that was in physical gold. And that's, as I mentioned earlier, that's one of the ways that they survived sanctions. Now there's a there's an even better irony to this, which is, you know, and you're right, Jeremy, they did freeze the Treasury securities at 300 bit. Once that happened, everyone else around the world said, wait a second, oh, they don't like Russia's policies, so they froze the Treasury securities. What if they don't like my policies? Maybe they're going to do the same thing to me. So people will start buying gold. Well, that this is part, not the whole, not the only thing, but this is part of what sent the price of gold so much higher again, up to $5400 an ounce. Russia made almost as much on the increase in the value of the gold as they lost on the treasuries figure out 300 billion. But the price of gold double s. They made more than doubled over the time period. They made more than $150 billion in mark to market profits on the gold. So gold served its purpose. One the US couldn't get their hands on it 2 It went up on fears and concerns that the treasury might steal the US Treasury might steal your treasury securities, and Russian made a fortune on their gold. So it did exactly what it was supposed to do. Speaker 2 I got to ask you about silver quick. I mean, the first time I've interviewed you, Jim, unfortunately. And our times went so damn quick. I could do this again soon, but silver slipped below 60 today, down from about 70 earlier this year. A lot of people saying that that $60.00 kind of the land in the sand. What lights the fuse on silver and where would you start buying it? Speaker 1 I think right now is a is a good place to buy it a silver. So it's more difficult to analyze than gold because it is a precious metal and a form of money store wealth. But it's also a huge industrial input. So you can have situations where the, you know, the precious metal part is going out, but the economy is in recession. So the industrial input is going down now for now, both are going up, the precious metals kind of going sideways after the January 2026 spike, but that'll that'll get traction that's finding its way back. And then the industrial input, I mean it's in everything, you know, electronics, semiconductors, catalytic converters, yeah, just just electronics generally. We all know what's going on there are these, you know, hyperscalers building these data centers, etcetera. They need massive amounts of silver. So the fundamentals of silver are very solid. Silver tends to follow gold with a lag. So let's keep if you want to figure out silver, keep an eye on gold. When you see gold start to get a lot more traction, you can expect that silver will not be far behind. Speaker 2 Now, we talked about kind of protecting your, your money from I guess one could call bad policy. Let's talk about protecting it from technology that you may not even know you're dealing with. I was reading a Bloomberg report this morning and they were talking about the FTC. It's scrutinizing open AI and Tropic, other AI companies over the safety of their products, according to a person familiar with the matter. Meanwhile, Americans over 60 reported $7.7 billion in fraud losses last year, according to the FBI. Jim, what can a scammer do today that you know, even a a smart, careful investor might not see coming? Speaker 1 There's not much they can't do. The scams are getting more pervasive and also more sophisticated and particularly with AI in terms of identifying the most vulnerable targets older people, people on, you know, disabilities, but but not exclusively. I mean, it could be any age group, but they the scammers definitely target the more more vulnerable audience. But they use AI they have they can get a recording of a relative and use AI to fake do a fake voice recording. Hi grandma, I'm in jail, would you send me bail money, etc. That is, that is pervasive and that is a $100 billion plus industry, if you want to put it that way. Now, my most recent book, Money GPT came out in late 2024, but it was, you know, pretty much ahead of the curve. A lot of things in the book you're just hearing about today, but I, I did put them in the book, but it's about AI and the impact on financial markets, stock market in particular banking system. I'll talk a little bit about medical moneyness, you know, things that are kind of like money, you know, like cryptos. And I actually have a chapter on nuclear war fighting. But to your point, Jeremy, when it comes to the scams, I've invested in a company that has absolutely changed my life for the better. Speaker 2 What's one thing outside, you know if they use call for it or not? I mean what's one thing that they could do before trusting a call? Ask them to move money. I mean it sounds basic but people get scammed into this all the time. Speaker 1 Yeah, it, it's good to have, you know, if you have a, a caregiver, A relative, somebody you can refer to or maybe if you think it's real, say, OK, give me your number, I'll write it down and then call somebody else and, and say, what do you think about this? You know, I think we're past the Nigerian Princess stage. We've had enough Nigerian Princess for years trying to get your money. They, they got these scams are very sophisticated. Even smart people fall for them because they're so convincing. But that's where an app like call for it. It's more than a convenience, it can actually save you from being scammed. Speaker 2 You know, I don't actually done a lot of research on you. I don't know if you have your own children, Jim. You do because I was going to ask you I. Speaker 1 Have 3. Speaker 2 Yeah, so I mean, what's the, what's the best Money Advice you've ever given to your own kids? Speaker 1 Well, here it is pretty. I would say you can stick to 5th grade math if you know what you're doing. Warren Buffett has the Warren Buffett has the reputation of the greatest investor of all time, or say greatest stock picker of all time. He wasn't he was okay, I'm not dinging Warren Buffett. He was not the greatest stock picker of all time, but he had one insight, one bit of genius. He understood the power of tax deferred compounding. If you put money away and don't touch it and let it grow and compound it, etcetera, etcetera, for long enough period of time, you'll be rich without even trying. And Buffett took it a step further, which is he didn't pay taxes on a lot of it because he because he This is why I kept buying insurance companies. GEICO, January, you know cetera, he bought a string of insurance companies and sure I have I have a second law degree in taxation. So I know a little bit about this. Insurance companies have tax benefits that other companies do not have in terms of you know, potentially paying income taxes on your portfolio gains, et cetera. So tax deferred compounding, using insurance companies for the tax shelter part, really important not to lose money. Making money. Yeah, that's a good thing. But if you lose it, you get it's like getting set back thrown for a 20 hour loss. You kind of have to start over. And finally, and this is where the children and the grandchildren come in. Start young now these, one of my grandchildren was eligible for a Trump account. And I don't care if you hate Trump or not yet love them, hate them. I'll leave that to the individual, but these Trump accounts are winners. I don't care. I don't care if you like Trump or not that if you're born in this is a small window. It's kind of like 2025 and a little bit in 2026. If you and finally, you can open this online, just go to U.S. Treasury, type in Trump account. You'll find it easy to do. The government throws in $1000 for starters. So I've started putting money into this for my grandchildren, you know, start early, you know, birthday presents, holiday presents, etcetera. They they'll be millionaires by the time they're 21 without trying because that's just how the money compounds and you get into a stock index fund. But it gets better than that. I think the the CEO of I'm trying to think of Elon Musk of SpaceX, the CEO of SpaceX gave like one share of SpaceX to every, you know, Trump account holder of a certain age. And by the way, these are available for other age children. There was there was one slice where they they gave you $1000. But even if they don't do that, you can still open these accounts. They're basically Iras for kids. Well, you take the Warren Buffett formula, which is tax deferred compounding without losing money and start young. You will make money without even trying. Speaker 2 Yeah, all right. We've spent a lot of time on what could go wrong. You're ending on what starting early can make possible. Jim Rickards, thanks for joining us. I appreciate making the time today. Speaker 1 Thanks. Speaker 2 All right, Jim, always a pleasure. You'll find his work in his newsletter, Strategic Intelligence, his daily Reckoning column, and of course, his book Money GPT. We appreciate that time and today's show is brought to you by Kaushi Trade, the first CFTC regulated gold and silver perpetuals in the US 24/7 with no expiration date. See in the description here for an exclusive offer and product restrictions. Availability varies by jurisdiction. Not available in Canada. Now, if this made you think twice about your money, subscribe. It's free and tell us below over the next year. Are you more worried about inflation or recession? I'm Jeremy Saffron for all of us here at CAICO News. Thanks for watching. Speaker 1 In Focus with Jeremy Safran is presented by Calci Trade Gold and Silver Perpetual Futures 24/7 at calci.com.