AMA 45 – Inflation Nation with Daniel Ameduri

Daniel-Ameduri

With an insurmountable national debt and a disastrous worldwide economy, could the United States still come out top dog? Join Jason Hartman and returning guest, Daniel Ameduri, inflation expert and Chief Strategist of FutureMoneyTrends.com, as they examine the possibilities and talk about Daniel’s predictions for the new year. Daniel explains the difference between price inflation, which, though we have inflation, we aren’t seeing it in everything yet, and hyperinflation, which is a total loss of faith in currency. He talks about how if we have deflationary shock, it won’t matter what the Federal Reserve does. People around the world will lose faith in America and the dollar will become worthless, and feels there will be some type of quantitative easing. Daniel notes that, in his opinion, the $20 trillion mark in our national debt will be the psychological level at which people stop buying our debt. Jason and Daniel also talk about resource wars as resources are becoming scarce. According to real data, oil has peaked, silver has peaked, as well as many other natural resources.

Jason and Daniel also discuss this possibly being the year of Ron Paul, whether he wins in the Presidential primaries or not, simply based on his foreign policy solutions. One thing Daniel notes is that our government redistributes our taxed incomes all over the world. Americans get caught up in the debate over a tax base, but Daniel says, “Hey, you’re fighting over your own money!” But Daniel is also optimistic in saying that the U.S. still has an advantage over the rest of the world due to our business base, large military, and the largest store of gold. We’re still going to go through hard times, but it’s still possible the U.S. can come out on top. The dollar is losing its value as other countries trade in their own currencies. Daniel expresses that a complete currency crisis now is to the U.S.’s advantage. The U.S. needs to do a currency reset and back the dollar with gold again. He also feels gold will be higher due to quantitative easing, the Euro crisis, and Iran.

Jason and Daniel’s final words of advice are don’t be distracted by pop culture. Pay attention to what is really going on in our country and around the world.

Daniel Ameduri is a free-market thinker and inflation expert. His market calls are firmly rooted in free-market economics theory – the theory master economist Dr. Ludwig von Mises brought the world decades ago. Like von Mises, Daniel understands that government’s monopoly over money and banking is utterly misguided and is distorting credit markets. Its intervention is disastrous and dangerous as it churns out more dollars and generates unsustainable booms and busts. Daniel carries on von Mises” legacy, bringing investors eye-opening, no-holds-barred analysis, market calls that are dead-to-rights, and strategies for investing that protect personal wealth during turbulent times. Daniel has been featured on RT TV, Power Hour, Financial Sense and on over 100 radio shows. He is currently the editor of FutureMoneyTrends.com and was formerly with NIA. Appearing on MSNBC, CNBC and KTLA News, inflation expert Daniel Ameduri calls it like he sees it… and he sees it pretty clearly.

Daniel was one of the first to call the market crash of 2008… and the collapse of both Lehman Brothers and Washington Mutual. Daniel went on to start Future Money Trends in 2010… and it has quickly become one of the top websites for the gold and silver markets. In addition to providing cutting edge research about macro-economic trends, Daniel regularly profiles micro-cap companies with explosive upside… rare gems with the potential to make investors rich.

Narrator: Welcome to the American Monetary Association’s podcast where we explore how monetary policy impacts the real lives of real people, and the action steps necessary to preserve wealth and enhance one’s lifestyle.

Jason Hartman: Welcome to the podcast for the American Monetary Association. This is your host, Jason Hartman, and this is a service of my private Foundation, the Jason Hartman Foundation. Today we have a great interview for you, so I think you’ll enjoy it. And comment on our website or our blogpost. We have a lot of resources there for you. And you can find that at AmericanMonetaryAssociation.org or the website for the foundation which is JasonHartmanFoundation.org. Thanks so much for listening and please visit our website and enjoy our extensive blog and other resources there.

Start of Interview with Daniel Ameduri

Jason Hartman: My pleasure to welcome back to the show Daniel Ameduri. And he’s with FutureMoneyTrends.com. he is the chief strategist and an expert on inflation. And you’ve heard of him before on the show and I’m sure you’ll find this interview to be quite fascinating. Daniel, welcome, how are you?

Daniel Ameduri: Good. Thanks for having me on the show again.

Jason Hartman: Well, my pleasure. So 2012 is upon us and everybody’s out with all kinds of predictions. Most of them are completely meaningless in my opinion. Some are meaningful. They all have maybe a little bit of truth in them but that doesn’t mean you should believe all the rest of it. And what are your thoughts about this year? Oh, a lot is going on. Europe is in major crisis. The US is in crisis although many refuse to believe it or won’t act in any way that is in accordance with the crisis we’re in. But what do you think is going to happen this year?

Daniel Ameduri: Predictions, when it comes to economics, they’re always very difficult because of stencil planners. So not only do we have to look at the macroeconomic data like demographics and different things that are going on in trade and GDP unemployment so we can see those trends and try to make a prediction on what’s going on with those trends, but then we always have to also predict what the human reaction will be at the central bank.

So taking that into account, looking at how the economy is going right now, I would say that the highest confidence prediction I can give you is that we will have some type of Quantitative Easing 3 begin. It might not even be called Quantitative Easing 3 but it’ll definitely be a new bond purchase program, specifically of US Treasury by the Federal Reserve. So this will be the continuation of the monetization of debt that we’ve seen since 2009, early 2009, and I wrote things that were gonna happen for a few reasons.

Number one, the economy is absolutely depurating when it comes to the real unemployment number. We have a major debt crisis in The United States when it comes to people purchasing our treasury. We’ve literally had 4 weeks or 5 weeks of foreigners having a net sale of US treasuries. In fact, a few weeks ago it was actually a record exit of foreigners. So we’re not seeing a huge avalanche, but certainly foreigners are setting themselves up to slowly reduce their exposure to US debt.

Now, we need more people to buy our debt than ever, though. We have $15 trillion dollar arm and we need more debt. We’re gonna need another $1.2 trillion in debt that’s expending for fiscal year 2012.

Jason Hartman: Let me just break in there, Daniel, for a moment. I want to comment on or have you elaborate on some of those remarks. So, first of all, you say the $15 trillion dollar arm, you mean adjustable rate mortgage, right? And so what that means is the way at which the The US borrows to finance its completely ridiculous over the top debt is adjustable, right? Is that what you’re talking about?

Daniel Ameduri: Absolutely. It is adjustable. And maybe a 3 month treasurer, 2 year tenure, but it is priced by the market. So without the Federal Reserve, we would be paying a much higher interest rate.

Jason Hartman: Right. And so the reason, just to kind of come full circle on that and explain it, the reason the number of foreign buyers for treasuries is so important is because that dictates our ability to spend recklessly and to not really let the chicken come home to roost if you will to keep spending and keep up the financing scheme that The US has created and foisted upon the world. But also, it really dictates interest rates. And the amazing thing, Daniel, and maybe you can comment on this, is that we don’t have higher interest rates by now. I am still shocked and awed at that. Because by any sensible understanding of economics and international monetary policy, we should have higher interest rates by now. But somehow they have managed to keep the scheme going longer, longer, and longer and kick the can down the road more and more. Your thoughts?

Daniel Ameduri: It’s because of programs like Quantitative Easing that’s causing an artificial demand. So as long as they have a huge demand for treasuries, they can keep interest rates low. And that’s exactly why the Federal Reserve will have to step in and continue this program because there just isn’t enough demand for treasuries to keep rates this low. And if rates go higher, it’s going to dramatically increase our interest spending and of course it’ll force us to borrow more money because we’re literally borrowing money to pay the interest on previous debts. We’re not making any principal payments on our debt.

So, as long as the Federal Reserve is able to continue this Quantitative Easing, which they could forever technically, we don’t know how long people around the world will accept this. The only reason people want treasury is because they have to purchase commodities and do a lot of different transactions between other sovereign nations in dollars so it’s a strategy to whole dollars since you’re going to need them and use them. But if people continue to see that we’re just out of control, which to me and you it’s obvious, and to many people listening it’s very obvious. I mean, I personally think the $20 trillion mark is going to be a very psychological level for the market and for people who are interested in buying our debt.

Jason Hartman: Yeah, absolutely. Well, one of the things I’d like to just comment about that is the higher interest rates that we must ultimately inevitably face in our future, there’s just no way around it. And the question is just how long can you kick the can down the road and not see the consequences of this kind of spending and these kind of policies? But the higher interest rates really would lead to a stronger rental housing market. And I know we were just talking about real estate before we started on the show here. And it would lessen the home ownership rate. It would lessen the number of investors entering the market to provide rental housing. And as long as the population either stays flat or keeps increasing, which it is, that just means one thing. It means people have to pay more for housing and it means a stronger and stronger rental market where landlords benefit.

So one of my big strategies is you lock in on this 3 decade long fixed rate debt now and you let inflation pay it off. You look at these favorable trends where there’s going to be a lower home ownership rate. Every 1% reduction in home ownership rates equals about 1 million new renters. And I just love that equation. I know even you who’s more of a precious metals bug than I am, and I agree that precious metals are fine, is seeing that and it’s a pretty good trend I think.

Daniel Ameduri: Talking about paying off those mortgages or seeing those mortgages go down in inflation terms, having the precious metals, you can use those precious metals at a later time to purchase more real estate or even pay off the real estate that you have. When it comes to what you’re saying as far as the rental market, I couldn’t agree more with you because that’s exactly what I’m seeing in my own personal area. I live in Southern California. There’s a lot of foreclosures. Well, a lot of people who are in foreclosure can’t buy a home now so they’re renting. So as you’re seeing interest rates go up, as you see payments get higher for people, you’re right. You’ll actually see the rental market become even stronger.

The only thing I would add, and I’m sure you probably agree with me, is you just want to be selective about where you’re going to buy. You certainly don’t want to buy in certain areas that makes the economic devastation during that inflationary depression that you left. So, strategic areas are improving. The one on the top of my head is Texas. Strategic areas that are booming would be highly advised for rental property, especially right now. Again, you can lock in ridiculously low payments. I know people literally they have $100,000 mortgage and they’re paying around $400. That is just a ridiculous payment, especially when you consider that you’re locking it in in dollars.

Jason Hartman: Yeah, you’re locking it in on ever depreciating dollars and you’re locking it in until 2042. Daniel, how much do you think is gonna change by 2042? We’re talking about predictions by 2012. But I think by 2042, maybe we won’t even be on the dollar anymore at all. And we will see pockets and various places around the globe of civil unrest for sure, maybe widespread civil unrest. We will probably see states secede from the union in The United States. That’s been my prediction for a long time. Some people think I’m nutty saying that but I think there’s going to be a state’s rights movement as they see a bigger, more intrusive, more irresponsible federal government than ever before and Texas will probably be the first to go. My prediction’s been it’ll become the Hong Kong of The United States, in other words the freer place where the ambitious people go to make money and produce value in the economy and just a lot of stuff. It’s an amazing time in history.

Daniel Ameduri: And I agree with you about the currency. There’s no way we’re going to have the dollar in its current form. And if you go back, we had the greenbacks after the Civil War. During the Revolutionary War we had the continental, or 40 years ago we had a dollar that was backed by gold. So, today we have a dollar that Federal Reserve knows is an instrument of debt. So, actually people may be shocked to hear that, yes, we may have a different currency, but actually it’s not that unusual in our history.

Jason Hartman: It’s not at all. And we’ve have 3 different central banks in this country. It’s not like we’ve had the Federal Reserve forever, thank God. We’ve had them too long. But that changes, too. So you’re absolutely right.

Daniel Ameduri: Going back into the predictions as far states seceding from the union, yeah. And I think that’s important for people to know that. Because even if it didn’t happen, we’re definitely going to have civil unrest because the fact is when you look at from here to 2042 or just from here to 2020, I mean you’re looking at situations where you’ve got four grades and metals being mined have fallen 95% in just the last 75 years.

So, the industrialization and the idea of having everybody be like the west where everybody has their cars and iPads and iPhones, the left did it and just completely depleted a lot of these huge resources that we haven’t discovered anything like the resource we discovered in the last 100 years. So the idea of China and the rest of Asia and The Middle East and Africa all becoming westernized, you’re really looking at a situation where you could end up literally having resource wars. And we may already be seeing that with Iran and Iraq.

So, if you look at the future, definitely the resources are scarce and people will say there’s no peak oil, there’s no peak silver, there’s no peak gold. Fine, if you want to believe that, that’s fine – I’m not going to argue with you. But if you look at the actual data, we have peaked in oil discoveries. If you look at how much silver was produced in Nevada, 15 years ago we were producing 25 million ounces of silver a year and last year we produced 7 million ounces. So we’re finding less of it and we’re producing less of it. And it’s across the board for most resources.

Jason Hartman: There have only been a few ways to really create a lot of wealth throughout history. And the first one, my favorite, is real estate and resources. The other one would be banking, in other words find a way to get in bed with the government and rip off the public, and that banking and Wall Street, those kind of go together. So that’s number 2. And number 3 is media, obviously the media business, whether you’re a celebrity or you’re Rupert Murdoch or Ted Turner and very lucrative. And then the other one is technology, Steve Jobs, Bill Gates, etcetera, etcetera. So, those are really the 4 ways to wealth. And I’d say that the most accessible way for everybody listening is real estate and resources. You’ve got to control those things. And if you control them, largely with other people’s money using leverage to do it, you’re really in the banking business in a way, too. So you’ve topped 2 of the 4.

Daniel Ameduri: And it’s hard assets.

Jason Hartman: Right, real estate and resources are hard assets. Exactly, physical assets, couldn’t agree more. Daniel, what other predictions do you see for 2012? And even go beyond 2012 if you like because obviously we’re not just talking about one year here. But this is a rather ominous year. Some people think the Mayan calendar will come home to roost on December 21st. Who knows? There’s just a lot of really insane stuff going on right now. We’ve got an election. Any thoughts you have about the political environment, too, would be great. We’d love to hear it.

Daniel Ameduri: I think this is the year of Ron Paul and that doesn’t mean he’s going to win the nomination, it doesn’t mean he’s going to win the presidency. But this year nobody will be more influential in the 2012 election than Ron Paul. Because, Ron Paul, when he converts somebody to the liberties cause, the cause of individual rights, I want to say live and let live but what I mean is as long as you’re not harming other people, you’re allowed to make your own choices and have free will and do what you want with your property, keep the fruits of your labor. Once he converts somebody to that idea, that’s really a founding fathers type principle and ideology. Once they’re converted, there’s no going back for them.

Jason Hartman: And that’s a wonderful thing.

Daniel Ameduri: When Mitt Romney and all these other people think that, okay, at the end of the day everybody’s going to endorse Mitt Romney and we’re going to move forward, it honestly doesn’t matter. I don’t think he would, but even if Ron Paul endorsed Mitt Romney, none of his followers are going to vote for Mitt Romney because you can’t.

Once you know about the Federal Reserve, once you understand that we’re literally allowing ourselves to be taxed on our income so we can prop up dictators and spend just billions or trillions literally overseas, once you understand the difference in military spending and defense spending. . .Ron Paul did a great job in his debate and he talked about defense spending is protecting your borders, military spending is spending a billion dollars on an embassy in Iraq which he considered a waste of money.

But I just really see this being the year of Ron Paul. And I think he does have a chance to win the Republican nomination. If he did win the republican nomination, I have no doubt that he would go on to be our president because the avalanche of support for Ron Paul if he won the nomination would be so massive. And he draws so many independents and he can even draw in liberal democrats because of his foreign policy. Because, in the end, there’s one thing people can agree on that want to be fiscally conservative or just less empire-like and that’s we have to change our foreign policy and the way we treat other people.

Jason Hartman: Fair enough. But I will say, Daniel, as much of a fan as I am of many of Ron Paul’s ideologies, I wish he would compromise a bit. I think he’s just too radical on the foreign policy stuff. As a purist, he may be correct, but to just up and pull out of any support for Israel, to say that you can be so isolationist in today’s world, it may be possible, but if it is possible, and I’m not sure it is but if it is it has to be gradual. It would be just too much of a shock to the system. And the way we’ve been doing it is wrong. I agree, we’re just making too many people angry at us. There is definitely a blowback issue. But I think just start moving in that direction and start getting some of the people that won’t support him over to his side because the thing about Ron Paul, and I hate to keep talking about him on the show because I feel like I talk about him too much to be honest with you, but the thing with him is that he’s the only guy that would really change anything. And I love that because we know a lot needs to change. But I think he’s just gotta loosen up.

He’s not gonna be president. I don’t think there’s any chance of it, at least not this time around. But I think he’s got to move a little bit more towards the center on some of that stuff.

Daniel Ameduri: On his foreign policy, in my opinion he’s definitely not in isolation because he doesn’t want to trade with all people. Just like we traded with China and Russia, he wants to trade with Iran. Typically economies that have good business relationships don’t want to go to war with each other because it’s kind of lie the situation China’s in. You don’t want to hurt The US too bad because obviously you have a pretty good consumer here.

Jason Hartman: Nobody wants to kill their customer.

Daniel Ameduri: Obviously, we would have to talk about this for days to go into the full aspect of the foreign policy because a lot of it is our foreign policy has created a mess and so now we’ve created this mess and it’s kind of like you put somebody who’s in karate in a headlock and they go, okay, now get out of this. It’s like the whole point of karate is to prevent you from getting me in a headlock. Once you’ve already got us in a headlock, maybe they’ve already won. Maybe they’ve already choked you out. So we created this huge disaster in The Middle East and now it’s like telling Ron Paul fix it. And it’s kind of hard to fix it because you’ve already messed it up so badly.

And when it comes to Israel, we are sending billions to Israel, but we’re sending billions to everybody around Israel.

Jason Hartman: We’re doing exactly what the Wall Street firms do in a sense with our foreign policy. They support the left and the right politically so that they can buy off the politicians and get all the legislation passed in their favor with their lobbyists and so forth. And that’s really what we’re doing with our foreign policy.

I was listening to one of my old seminars where I sighted a news story about how 2 years ago, maybe 2 ½ years ago, it was in the news, it was major mainstream news, where we were talking about selling military equipment to Libya, to Gaddafi. And look what happened.

All of these people like Bin Laden, Hussein, 20 years earlier they were our friends and we were propping them up and giving them money, then they become our enemy. It’s just the stupidest thing ever. It’s unbelievably ridiculous.

Daniel Ameduri: Unfortunately, most people who do have issues with Ron Paul’s foreign policy like you’ve expressed you have, most people don’t acknowledge that. So they just wholly completely write him off as a kook.

For me, it all comes down to property rights and the fruits of my labor, because the fact is I have a 2 year old and I have a 4 month old and I’m unable to give them everything I earn and buy them the things I want to buy and spend the time I want to spend time with them because I have a government that takes my income and then redistributes and distributes my wealth all around the world. So, in the end, when it comes to our foreign policy, when it comes to our entitlements whether it’s domestic, to me it’s a real personal issue because it’s like I just don’t like people taking my money to spread my money all across the world.

It’s so funny – Americans love to get caught up in oh we want a 9-9-9 tax plan and we want a 20% flack tax, we should have this perfect progressive tax. But wait a minute – you guys are fighting over what’s yours.

Jason Hartman: You’re fighting over what’s yours. That’s a great quote

Daniel Ameduri: It’s your money. You don’t need a 5% tax cut. We had no income tax all the way until 1913. You could still have a gas tax, you can still have local taxes and sales taxes. There can still be taxes of fun government but the taxing of the income is absolute tyranny because of course, as you know, you have employees, you get taxed on your income and then everybody you pay has to pay taxes on their income and of course everywhere we go and spend our money we get taxed again, we get taxed on our property, and then everybody who receives that money. Our dollar is taxed an incalculable amount of times.

Jason Hartman: They’ve done studies about that and I read one that was talking about how a loaf of bread that you buy at the grocery store is taxed over 200 times before you buy it. So if you don’t think that goes into the price and it’s factored into the price we all pay, you’re not paying attention because it certainly is.

But, hey, let’s get back to predictions. So another round of quantitative easing, obviously they’ll give it another name. What are we going to see inflation rate-wise? I keep waiting for this massive inflation to come. I think that the real inflation rate is around 9 to 10 percent. Of course that’s not the official number, it never is. But we’ve got to see a future with 20, 30, 40 or maybe a lot higher percent inflation annually. There’s just no way around it ultimately. The question is when. Your thoughts on that?

Daniel Ameduri: I don’t think we’re going to see it this year unless there’s a situation where there’s a war with Iran and oil was $200 a barrel. You’re paying $70 a gallon for gasoline, you’re going to see a significant deflationary shock to the system in the sense that people are going to be able to consume as much so there will be a lot of businesses closing. But then you would also have that severe inflation, price inflation on things you need like food.

So if we would happen to have oil shock, we could definitely see it this year. Otherwise, I don’t see the description of having that severe price inflation for a few more years. And it’s more of the loss of states of currency. Inflation is the expansion of the money supply. Hyperinflation is a loss of faith in the currency itself. And I think that’s what we’re going into. Some point in time in 2012 or early 2013, I think we’re going to see a deflationary shock to the system. I think it’s going to be just like 2008. It’s going to be a huge sell-off in the stock market. People are going to be looking for liquidity. You’re probably going to see a pretty strong dollar rally.

And then at that point, I think the Federal Reserve will unleash everything they’ve got. The world will unleash everything they’ve got to keep the system propped up. And when they do that, I think that’s where we cross the line from deflationary shock, which will be very short term, to a hyperinflationary event where literally the big money, the hedge funds, the big investors, foreign governments, are going to be flooding in the hard assets like real estate, like gold, like silver.

China, you’re already seeing them make their strategic moves in not only buying up hard assets, companies of hard assets, but they’re loaning money to the resource companies. They loan more money to resource nations than IMF did. So I think that’s at that point and time and I would say that would probably be around 2014, maybe 2013, but 2014-2015 you’re probably going to see some type of major currency event with the US dollar. Again, there’s so many wild cards because we don’t know exactly what the central bankers are going to do.

But just to throw another wild card in 2012 that people should be watching is the euro. We can literally see Greece default any day. Even a chief analyst at S&P recently said we will see Greece default. So if you see Greece default, all of a sudden you’ve thrown in another wild card. You got a huge dollar rally that’s gonna happen. That will force stocks down. But at the same point and time, I think you could actually see gold and the dollar rally together this time. And if you saw the golden dollar rally together, at some point and time we would either see the dollar eventually fall, gold continue to go up, because eventually investors would kick their safe haven.

David Morgan puts it best. When you step back and look at it, everything you sell is going to be converted into currency. So there will be a strong demand for dollars in any crisis.

Jason Hartman: That’s an interesting point because that’s what we saw happen in 2008 actually. As liquidity events were occurring, it was soaking up dollars around the world and so many people couldn’t understand that. And then there’s all this money printing and the bailouts and people were saying why don’t we have inflation. And the other side of that they didn’t understand is because we had credit tightening. It’s money supply plus credit supply that creates inflation or deflation. And it was amazing to me how I’d be watching CNBC, I’d be reading the Wall Street Journal and all the renowned economists didn’t seem to ever address or understand this simple obvious issue that was obvious to me but I guess it wasn’t if you went to an ivy league school. It just kind of blew my mind.

Daniel Ameduri: And people almost even looked at it as a stool of three legs. There’s inflation, deflation and hyperinflation which is loss of faith in the currency. So, a lot of people think of inflation and then you move to a certain percentage of price inflation and then all of a sudden you redefine it as hyperinflation. I really don’t look at it that way. There’s inflation, there’s deflation, but then there’s a whole other thing out there called the loss of faith in the currency which is hyperinflation.

So once people lose faith in the currency itself, once investors lose faith in the currency itself, that’s when you have your big problems. And yes, you’re going to see problems go up and it’s going to feel like inflation, but it’s actually going to be just a complete collapse of your currency. So whether the federal reserve prints trillions of dollars or just tries to maintain the situation, the dollar’s entire value is based on the perception of the US having a strong economy.

Once we have the next mass of deflationary shock and our federal debt is nearing $20 trillion dollars, it won’t matter what the Federal Reserve does. If they print money or contract the money supply, deflation/inflation, it’s not gonna matter because at that point and time people are going to have a loss of faith in America. And when they have a loss of faith in America, that’s when you have a big problem for the US dollar. So you could have a deflationary of shock, and in my opinion, the next thing that would happen, it wouldn’t take too long. I’m talking weeks or months at the max at that point in time. Then you see a hyperinflationary event where the dollar itself becomes worthless.

Jason Hartman: That’s an interesting distinction because there’s no academic definition for hyperinflation, by the way. And you made the distinction. You call it correctly – you call it price inflation because the academic definition for inflation is simply creation of money which everybody knows we’ve been doing that for quite a long time and especially lately. So we already have inflation. We just don’t see price inflation in everything. We do see it in necessity, things like food and energy, the things that are taken out of the core rate. And then that 3 legged stool where hyperinflation becomes loss of faith in the currency, I really like that.

It’s not like hyperinflation is when the rate hits over 30% annually, then we have hyperinflation over 2000 or Zimbabwe-ish 2 million percent annually. That’s not hyperinflation. Hyperinflation is really something that’s a loss of faith in that symbol, that currency. And not to be confused with money, currency and money are very different things. Money is something that has intrinsic value. Money is resources. Currency is a symbol of resources with a fluctuating value and so that’s a very important distinction there. I like that.

Here’s the thing that I always say to be a bit of a skeptic. Everything you’re saying is completely accurate about the US government and the Federal Reserve and our situation. However, and this is a giant however, aren’t we just better off than everybody else? Granted, we may not manage our money better than every other country, although there aren’t many that manage it very well, but we still have the reserve currency. And I admit that could change at any moment if other countries just want to stop using our dollars, the reserve currency. But we’ve got this huge military that allows us to throw our weight around. We’ve got the economic hit men – we had John Perkins on the show – and we throw our weight around a lot of ways that I say is being used today to force the reserve currency upon the rest of the world. Your thoughts about that?

Daniel Ameduri: It’s true. The United States does have a significant advantage and we have the infrastructure, we have the businesses. The money flow is to The United States – it’s not to Hong Kong yet. China is simply not ready to have a reserve currency. There just isn’t the demand or the transactional ability for renminbi to be reserve currency. In fact, the closest thing it could have been was the euro. It’s not going to happen now.

So, The US does have some advantages to kick the can down the road. And here’s the big wildcard. The US has the advantage that we still have the most gold. So, The US, if it were to back its currency by gold and kind of reset the system, paying off its debt with inflated dollars, having some type of chaos for a few weeks or a few months and then coming out and having a new dollar backed by gold or backed by natural gas or something where The US would have the ability to have that ultimate strong currency again, where the dollar is as good as gold as it used to be.

Yeah, there are ways that The US can get out of this where they literally screw almost everybody and still end up as top dog. Maybe that’s what’s going to happen. Nobody can know what’s about to happen for certain. We know that we’re going to go through hard times. We know we need to prepare. We know we need to make certain plans when it comes to how we’re going to make our income. We need to invest in our personal selves, invest in our own businesses, be wise about what we spend our money on. But when it comes to what’s going to happen with the sovereign nations with what the central banks are going to do, certainly The United States has formed the whole situation of what’s going on around the globe financially and even regionally what’s going on with different countries and their attitudes towards The US or towards each other. So, yeah, The US does have an advantage in the sense that, I can’t think of a word for it, but I guess they have the advantage because The US is the architect of the current financial system.

Jason Hartman: So that’s why, the doomsday scenario, I can totally see how they play out on one hand, but on the other hand I see exactly what you were just saying, that there’s a lot of things The US can do even if everybody loses faith in the dollar to just keep it going. That’s the wild card. The central planners are the wild card. You can’t judge all these things against pure logic because you just don’t know the reaction of the central planners and what it will be. It’s unpredictable. And that’s what makes it difficult.

Daniel Ameduri: Yeah. And China and Japan just did something to where they would be doing their transactions, direct currency traits. They’re no longer getting the dollars. They’re now going to be using their own currencies to do trade.

Now, India and China have done this with Iran, so has Russia, so has a few other countries. So the dollar is losing some of its appeal as the reserve currency. The country would literally want to do their transactions in the stable medium of exchange. So, in my opinion, I think The US’s advantage is for a crisis to happen sooner than later because if these countries keep signing these treaties to do currency trades in their own respective currencies, if more countries in The Middle East want to accept different currencies for oil, then you’re definitely going to see the dollar lose its reserve currency status in 8 to 12 years.

I think the dollar is going to lose its reserve currency status. But if there’s any hope for it to keep its reserve currency status, it’s to The US’s advantage to have a complete currency crisis now. Let the euro fail. The dollar will be the only thing less standing and if they did some type of reset where they converted the dollar through gold, I think that would be the best way out for The US with having a reset. Again, this doesn’t a difference as far as what’s going to happen with unemployment and the baby boomers and the retirement generation, but if The US wants to maintain that role as reserve currency, I think a crisis happening from 2012 to 2015 is more ideal for The US than having a crisis in 10 years down the road where renminbi is a much stronger currency and already doing direct transaction with its major trading partners.

Jason Hartman: Very good points. What other predictions do you see for 2012 in wrapping up here?

Daniel Ameduri: Well, I can’t end the show without giving you a prediction on gold. I really see gold ending the year somewhere between $2500 or $3000. Three reasons for that: number one, we’re going to see more quantitative easing. Number two, we’re going to continue to see a euro crisis. Only, unlike the last 2 years, it’s going to look more and more as a currency crisis. And, number 3, Iran. My gut instincts when I look at what’s going on, I really do think we are going to do something about Iran this year. It’s an election year. I don’t want to say that’s going to play into it, although it would be very beneficial for Obama. As you know, sitting presidents do not lose during wartime. But if we see that oil spike, we’re going to see a huge gold spike as well.

Jason Hartman: Pretty interesting stuff. And then the question will be did the gold go up or did the dollar just go down a lot more than anybody’s willing to admit. So very good point.

Daniel Ameduri: That’s funny because they both might go up. You might see the dollar rally with a war in Iran and you might see gold rally.

Jason Hartman: I know that you said that. That was an interest point. That’s a pretty rare occurrence, isn’t it, that you would see both because usually they’re countercyclical.

Daniel Ameduri: Absolutely. If you look at the dollar index chart and gold, literally they trade inverse. There’s an inverse trade there when you look at it – it’s just completely the opposite. But we have seen gold and the dollar together in the last two years on occasion. And it definitely could happen. Even though the dollar would obviously be losing significant value against oil, that would really be not because of the currency itself. That would be because we’re having an oil crisis. But that instability could cause people to obviously sell stocks and it flood into dollars, and of course people who are really concerned about major instability in The Middle East would be buying physical gold and silver

The dollar index could be at $90, silver could be at $75 and gold could be nearly $3000 an ounce. And oil would be at $200 a barrel.

Jason Hartman: It’s amazing to contemplate that. But nobody thought any of that would happen when gold was $280 and oil was $20 bucks and it’s just sort of hard for people to grasp those ideas that cup of coffee at Starbucks is going to be $17 someday. Maybe it’ll be $92. It’s just hard for people to think that way but historically it’s absolutely happened. It’s happened in The US, it’s happened all over the world many, many times. So it shouldn’t be that hard to comprehend.

One more thing I gotta ask you about, Daniel, there’s an old saying about how our culture is so distracted with these stupid bread and circuses, you didn’t give us any pop culture predictions, what’s going to happen with the Kardashians or something like that.

Daniel Ameduri: I don’t know anything about the Kardashians. I don’t even know why they’re famous.

Jason Hartman: Neither do I. They’re famous for being famous, kind of like the Paris Hilton syndrome. It’s just absolute stupidity. And I really encourage folks, obviously the listeners of this show I don’t need to tell, but don’t be distracted by this idiocy in pop culture. Pay attention to the real stuff, the things that are underpinning our economy and our liberty. That’s what is important. They’re trying to distract us with that stuff but we’ve got to make sure we have the discipline not to get distracted and to pay attention to what really matters. Daniel, give out your website.

Daniel Ameduri: FutureMoneyTrends.com, sign up for our free newsletter. We give economic updates once or twice a week. We also have other investment ideas and we’d love to have you as a member and I promise you with one of those newsletters, when we send an email we make it count. We will not flood your inbox with random emails.

Jason Hartman: Good stuff. And that’s FutureMoneyTrends.com. Daniel, thanks so much for joining us again today.

Daniel Ameduri: You have a good day, Jason.

Narrator: The American Monetary Association is a nonprofit venture funded by The Jason Hartman Foundation which is dedicated to educating people about the practical effects of monetary policy and government actions on inflation, deflation and personal freedom. Our goal is to help people prosper in the midst of uncertain economic times. This show is produced by The Jason Hartman Foundation, all rights reserved. For publication rights and media interviews, please visit www.HartmanMedia.com or email [email protected] Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate professional if you require individualized advice. Opinions of guests are their own and the host is acting on behalf of The Jason Hartman Foundation exclusively.

The American Monetary Association Team

Transcribed by Ralph

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