AMA 98 – Jeff Macke Talks Inflation

 

 

Jeff Macke is the host of Breakout on Yahoo Finance and was an original cast member of CNBC’s Fast Money. He is also the author of Clash of the Financial Pundits: How the Media Influences Your Investment Decisions for Better or Worse, which he talks a little bit about on today’s show. In this episode, you’ll find Jeff and Jason addressing some Doomsday theories as well as talk about inflation and deflation in currency.

 

Key Takeaways:
4:50 – Jason is staying at hotels for half of the price because he’s been using services like Hotwire.com.
8:30 – People are having a hard time finding jobs. Investment bankers are becoming Uber drivers just to make some money.
11:45 – Jeff believes there are plenty of jobs available, just not jobs people want. Jeff says if you get a job you don’t want now, it’ll help provide you some money and help you work towards something you are passionate about.
13:00 – Jason is exciting about robotic technology and the self-driving car.
17:30 – Jeff is still nervous about the stock market. The stock market is doing better now, but it’s still pretty unstable.
19:52 – Jeff is not sure if we’re going to see a huge inflation in our money, but at the same time he doesn’t see how the deflation outcome would work too.
22:00 – Jason believes it’s important to prepare your money for both inflation/deflation scenarios. He explains how to do that in this segment.
24:30 – Never forget that economics is a social science

 

Tweetables:

It is an incredible time to be alive

With these future robots they say they’ll maintain themselves and fix themselves – maybe they’ll just take over the world!

This has been a very easy market to criticize and bad mouth for the last 5 years, since the stock market bottomed.

 

Mentioned in this episode
Clash of the Financial Pundits by Jeff Macke
www.Hotwire.com
www.Priceline.com
www.Lyft.com
www.Uber.com

 

Transcript
Introduction:
This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit www.HartmanMedia.com
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 blog post, we have a lot of resources there for you, 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.
It’s my pleasure to welcome Jeff Macke to the show – he is host of Breakout on Yahoo Finance,  an original cast member of CNBC’s Fast Money and author of  Clash of the Financial Pundits: How the Media Influences Your Investment Decisions for Better or Worse. Jeff, welcome, how’re you doing?

Jeff Macke:
I’m doing well, thanks for having me.

Jason:
Good, good. Hey, it is great to have you. You just took a really interesting trip across the country and you saw some interesting stuff – give us a little feedback on your trip.

Jeff:
I grew up in retail – my father worked to target, so he’d go from target to target and he taught me that the best way to learn how a business is going and how people are doing is to not be the guy who yells at the person at the service desk, but rather to be the person who asks them how they’re doing. Whether it’s a waiter or a business owner or someone you’re sitting next to, just listen to their problems and hear them out. What I heard out there is that this economy is booming. It’s not in a bubble sense, and it’s not in a sense where portrayal seems to be something along the lines of Mr Burns or Snidely Whiplash preying on these poor 99% of people. I think this is a much more broad-based type of economic recovery and I think people are doing a little better than anyone wants to admit. I’m not sure why that is, but I was really struck by the nature of the economy just between what we’re reading about in the popular press and the sense of optimism being expressed by the way people are investing and behaving in the economy itself. I think it’s a great time to be a consumer right now, in particular.

Jason:
Certainly, technology has pushed down the cost of everything – well, not everything, but at least consumer products in terms of electronic and tech products. With the tools we’ve got for this nearly frictionless global commerce system we’ve got called the Internet, we have  price discovery, comparison shopping, reading reviews, getting better products, manufacturers making products because they’re listening to customer feedback.

Jeff:
It’s incredible. They talk about it a lot in retail, and we just did it ourselves, but it extends so far beyond just that retail model. I had exactly one hotel reservation, and that was at Disney Land because that’s one of the few places on Earth where you can’t just walk in and figure out a way to go see it – it genuinely does get sold out. I’ll tell you what, using just a smartphone, I was able to book boutique hotels with people who had gone ahead and taken the economic risk to build themselves and start to find locations. I could  expose my family to stuff that we otherwise wouldn’t have seen as recently as 5-10 years ago, simply because we wouldn’t have found  it. You have price discovery and product discovery – if you’re clever with how you use the Internet and this technology to your advantage, it’s going to control the prices – not just in terms of electronic, but also in your hotel room, in your flight, in terms of the bang for your buck – you’re getting what you pay for, which we haven’t really ever seen in history. It’s incredibly encouraging if you look at it from the big picture perspective.

Jason:
I would agree with you completely, Jeff. It is an incredible time to be alive, and I’ll give you a personal example. About 5-6 years ago, I discovered Hotwire, and I started using it and I discovered all sorts of new hotels I would have never known about and I would have never picked. By golly, I’m staying at hotels now for half the price I used to pay. You could call that the economy and the financial crisis, or you could call it technology, or you could call it a blend of all the above. The interesting thing about it is all these new incredible business models we’re seeing. When it comes to Hotwire, for example, hotels can have a risk-free way, and the same with Priceline (I don’t want to be agnostic; I’m not promoting the brand, I’m just saying that conceptually, it’s an interesting technology) because it allows the hotel to give away a better price without putting it on their brand. They can hide their brand  name until after you book the property, and so they can go ahead and advertise a lower price without you knowing who they are until afterwards. That’s an incredible idea and it’s only possible because of modern Internet-oriented technology.

Jeff:
And if you marry that with human interaction, and I’ve got a funny story about Priceline because one of the ways I was able to use technology to my advantage was when Priceline had messed up the one reservation we did have! I found an alternative just because I was friendly and got to talk to the person at the front desk who happened to work in another hotel in the Venice area. It was extraordinary, and so when you merge this technology with a sense of cultural  optimism and a little common sense and face-to-face human interaction, it’s almost alchemy. It’s such an incredible time.

Jason:
It’s definitely amazing. Then let’s talk about ride-sharing opportunities with companies like Lyft and Uber and the rest of them. We’re putting to work assets that have just been dormant, whether they be people assets and human resources or cars that were sitting in garages before and are now being used. It’s just so much more efficient, it really, really is incredible. We ain’t seen nothin’ yet, as the old saying goes. The next five years are just going to blow all of our minds, with biotech and nanotech.

Jeff:
If you think about the inefficiency out there. They put out a pricetag, I think it was about $17 billion and people said, ‘Well that sounds outrageous’. If you think about the economic inefficiency if you fly into Manhattan or JFK, you’ll find you’re several hundred people-deep, waiting for cabs, you’ve got a dozen cabs waiting there, and they’re all flowing through one dispatcher standing centrally. That’s the same business model they had 50 years ago. It’s literally the exact same model and it’s wildly inefficient. You’re wasting millions of dollars every single day by just standing there. Someone’s created this app where not only does it work at JFK, but you’re also creating markets where you can’t just go outside and hail a cab. In the vast majority of this country, it’s just not something you can do and you just can’t get a ride; you can’t hail a cab, you can’t call a cab – we don’t live in that world. It’s probably Chicago, New York and LA as the three cities where you can walk outside and hail a cab from the curb. Now, all of a sudden, you’ve opened that up to any market in the United States through this Uber and Lyft type of model. It’s incredible. It’s light-years from where we were.

Jason:
It is a light-year advance. Let me take the pessimistic side for a moment. We hear all of this bad news, we hear about the unemployment rate and the underemployment rate, which means that people with college degrees and massive student loan debt now topping $1 trillion – possibly the next bubble; I’d love your comments on that – are delivering pizza, working at Starbucks, driving an Uber car. I’ll give you a great example. I was in an Uber car a few weeks ago and I always ask the drivers if they do this full time, what their background is, what they did before. I’m always curious about that, as you are. This guy said he was an investment banker and worked on Wall Street, and here he is, driving an Uber car. I’m thinking ‘Oh my gosh, our economy is not allocating resources very well, is it? This guy’s got a Master’s degree!’

Jeff:
I don’t know, I haven’t met him but I’ve worked with a lot of investment bankers and he’s probably adding more societal value to the world now.

Jason:
[Laughs]. Fair enough, fair enough, I’ll agree with you there!

Jeff:
I hear you on the underemployment thing. It’s interesting but it’s one of those things that’s hard to define. I would never want to hire someone who didn’t think they were underemployed because you always want that sense of ambition and upward striving, but we do need a societal rethink on how we go about it and what the goal of our college education is. I’m not sure how much of a value you can place on some of the softer sciences. I’m a Psych major with a Film Studies double major type of construct out of college. Those have both served me relatively well socially and in a lot of different ways, but I’m not sure what value they themselves have in terms of what job you should be able to do or should be entitled to after that. I think that the real issue for the culture is not whether or not your college degree is going to get you entitled to learn a living at a certain amount of money, but whether or not you’re a hard worker and you have the ability to add economic value is going to get paid. As long as it’s not a situation where you can’t find a job, if your goal is to make money and you’re unable to do that, we’re okay.
There are some jobs that are simply never going to pay that well because the capitalist system doesn’t benefit them in that way, and that’s really where the question is. We’re now getting so many more college degrees and so many more people are going to college, and they’re graduating and they’re simply not coming out with skills that are necessarily commercially applicable. It’s a huge problem and it’s growing, but it’s not one that I think tips over the economy, despite the fact of the staggering sums that are at work there. There is enough money and enough  wherewithal that we’re not going to put ourselves out of business through our own student debt.

Jason:
Okay, so what’s going to happen with that student loan debt? It’s not dischargeable.    Are these kids really going to be just indentured servants? Many of them  are underemployed.

Jeff:
It’s a matter of whether they’re able to find jobs or if they’re choosing to work towards their passion or towards just a commercial application. The American Dream is not to be paid a ton of money just to do anything that your heart desires. The truth is that you’ve got to put some elbow grease into it and work. It’s not indentured servitude. My first job out of college was working at Macy’s, and I sold men’s shoes. I didn’t love that job, I’ll be honest with you, and so I worked hard to get out of that job and to be upwardly aspirational. It worked out well for me, but it took some effort and that was a hard adjustment. That was something that was just part of training society. I’m not sure what the answer  would be. It’s an ugly  side of this capitalist system, but you know what, it’s going to take work and it’s going to be something where people are going to not necessarily live a lifestyle where they can live their dreams. They’re going to have to do some stuff that they wouldn’t necessarily  dream about with the idea that maybe it’ll pay off over time as they work their way towards what their vision for themselves is. That’s a vision not necessarily for when they’re a 22-year old, but for when they’re 45 or 50 years old.

Jason:
You know what’s fascinating to me, Jeff? I have not reconciled this. I’m going to admit to my audience that I think about it all the time and I want to know, I want to have a prediction for what this is going to mean because I think it’s going to be huge. It’s the area of robotics. I recently watched a 10-minute video which was very interesting; it talked about how 45% of the jobs nowadays can be automated within the next several years. One of the main ones – we talked about Lyft and Uber as transportation, but we’re on the heels of the driverless car, and that just changes the game in so many ways. They had one of those driverless semi-trucks here in Arizona recently. They demoed it in Germany and the guy just sits there while the truck drives itself and delivers things all over the nation, or all over the world, I should say! Transportation is a huge area of employment. Can these cab-drivers re-tool and do something else or are they just going to be permanently unemployed? I don’t know.

Jeff:
I don’t know either. It’s important for the audience and for you and I to remind each other that these are not necessarily new problems; the printing press put a lot of people out of work as well. I don’t say that lightly. All these inventions have displaced what was skilled labor in the past, and this has been a constant evolution.

Jason:
It’s always been positive, and computers put a lot of people out of work, but then we needed people to work on the computers. I don’t know, with these robots they say they’ll maintain themselves and fix themselves – maybe they’ll just take over the world!

Jeff:
That’s the scary part. Them turning on us is actually a much more scary thing than them putting us completely out of work. The one thing the future has missed is the George Jetson sort of lifestyle where folks were inventing labor. it’s like when you watch those really retro futurist predictions from the early 60s when housewives would sit around and dishwashers would give them so much free time they wouldn’t know what to do with themselves. We’ve managed to figure out things to do with ourselves all along, so I think as long as we keep the robots from turning on us, it should work out to our benefit.

Jason:
When Elias Howe invented the sewing machine, women complained because they wouldn’t have anything to do – how would they make themselves useful in society, right? It seems as though they worked that out, but there’s always a transition time, and this doesn’t happen all in one day. It’s not like they put up the Berlin Wall, right? This is a gradual evolution, but it’s a pretty big deal. Yes, those predictions have always been there, I agree with you completely.

Jeff:
And ultimately, we’ve touched on it a few different ways, but the ugly side of it is that this is going to happen to the system. We’ve spoken about transportation, drivers in particular,  and if you look at cabs and you see the way that the cab industry is fighting the evolution of the world, it’s telling. They’re really expediting their own extinction by demonstrating just how inefficient they really are and how antiquated that system is. As individuals, what you have to do is be thinking ahead of that. If you’re a cab driver out there and you’re protesting Uber by fighting against it to protect your rate..

Jason:
You’re a dinosaur.

Jeff:
You’re a dinosaur and you’ve just got to know what’s going on. As the adage goes: If you don’t know who  the sucker at the table is, the sucker is you. You can’t be a dinosaur or you’re in big trouble.

Jason:
Right. That’s great advice. Talk about the markets for just a moment, if you would, and tell us what you think about the overall economy. We’ve certainly been talking about that, but maybe just give some of the more specific indicators, if you want – the stock market, the real estate market, whatever you like.

Jeff:
I think the stock market has been one that has just been feasting on skepticism for so long, and in my game, and in my book  Clash of the Financial Pundits, we talk a lot about profits of doom. This has been a very easy market to criticize and bad mouth for the last 5 years, since the stock market bottomed. I think it was March 2009 when the S&P 500 was 666 – a very demonic bottom. It’s been very easy to criticize this and call it artificial and to say that the Federal Reserve is printing money and the government is, in essence, lifting itself off the ground by its own ears, which is kind of impossible. If you bet that way, you lost and you lost big. There’s been this bipartition of people who had been part of this market and had been benefiting from it with some sense of distress because we have had two major, significant crashes in the last 15 years, which is not to be ignored. You also have people who have simply sat it out from the side lines and have bet on the sky falling over and over again.
The truth is that the sun’s going to explode some day, but it’s a lousy bet. Betting on this Doomsday scenario just means that there’s no place to cash in, so in terms of the stock market, I continue to be nervous about it; so many things can go wrong, but ultimately the economy has struggled through. Corporate earnings are decent, not terrific. Balance sheets are better by far than they have been for ages. Companies literally can’t figure out what to do with themselves in terms of how to put money to work, and I think the government is just the right level of screwed up right now that they’re not able to implement anything – it’s kind of keeping it out of the way, but I think that’s one of the bigger impediments to having the job growth in this country because I think we’re going to start in-sourcing some jobs that we’ve been out-sourcing to foreign nations for years. That’s going to provide a real tailwind for us if we can get in early.

Jason:
A lot of that tailwind is going to come from manufacturing and from 3D printing – it’ll be in  small, short-run, artisan-type manufacturing. Chris Anderson’s got a great book called  Makers. You may have read it; it deals with the future of 3D printing. What an awesome technology! That’s just going to put a lot of people back to work in the US. It’s going to be in-sourcing and on-shoring labor, I agree with you there. It’s a fascinating one.
Okay, so inflation or deflation in the future? What do you think?

Jeff:
I think we’ve been fighting deflation, and no-one wants to use the word because the Federal Reserve and the powers that be simply have no solution for deflation. As a result, we’re kind of in this environment where we’ve been printing so much money and we really don’t have either. There’s tension between two horrific outcomes – one which is uncontrolled inflation, which is  supposed to have  been manifesting itself for years now, and yet hasn’t got a foothold simply because the economic cycle is overpowering it. Can I choose ‘flation’ between inflation and deflation?

Jason:
‘Flation’? Just flation?

Jeff:
We can go with 1.5% – it works for me. I just don’t see the prices rising the way some of the real skeptics out there bill. We’ve been discussing a lot of nice trends, and if you’re in-sourcing jobs and you have economic growth, you have corporations with decent balance sheets, I’m not sure how you end up with a deflationary outcome. With the information working to our benefit, I’m not sure how you get rampant inflation when you have a nice capitalistic check and balance system in place in terms of price discovery. So it’s a pretty decent scenario. Is it perfect? No, of course we’re going to have outlying events, but we just haven’t seen that inflation that we were supposed to get from all that money printing. I don’t think that the folks were wrong on inflation for the last 5 years that would  change this Doomsday scenario to a deflationary environment  – I don’t think it’s any more valid. Again, sometimes the sky just doesn’t fall. If you go outside and look up, it’ll turn out that the sky is still aloft.

Jason:
In other words, it doesn’t fall in either direction – either inflation or deflation. It’s a status quo type of Phillips Curve model where it just moderates and targets inflation, which the Fed always has. Deflation is something that is tough to stop. I guess they can just print money into oblivion, and especially when they’ve got the reserve currency. It’s interesting because the government is so screwed up and every indicator would indicate inflation, right? That’s in terms of a monetary perspective, but technology is so amazing that it empowers the consumer, like you say, with massive amounts of price discovery literally in the palm of their hand. That is a strong force to keep inflation in check, isn’t it?

Jeff:
Some of the ways they’ve been printing money went to some of the corporations themselves. With their balance sheets, they’ve literally just started accumulating cash. That shows that it’s harder than you think to control inflation and create a situation where people have cash. It’s about the velocity of money and trying to get people to spend money when they don’t want to is pretty difficult, whether it’s a corporation or an individual.

Jason:
The interesting thing is investing for it, though. In my eyes, you’ve got to prepare for either scenario, right? If it’s inflation then commodities and long-term, low, fixed-rate debt is going to be an asset to you: rental properties, income properties. If you have deflation, you’re just going to be looking for yield anywhere you can get it. You’ve got to have dividend-paying stocks or cash-flowing assets – to the gold-bugs, good luck eating your gold!

Jeff:
Right, right.

Jason:
They’re going to be dying! And they have been. They’ve been wrong for so long. I remember Howard Ruff in the 70s, and then I had him on my show a couple of years ago. It’s like, I don’t know, maybe he’s finally going to be right, but I’m not seeing it yet, at least.

Jeff:
I write about this in the book because there are a couple of ways you can make a living as a pundit: one is to make people money, which is pretty hard to do, and the other is just to scare them.

Jason:
Right, that would be the legitimate way – make them money.

Jeff:
Sure, and that’s part of what’s motivated me. I’m trying to keep people out of the rat-traps of finance and not participating. I had a hedge fund and I liked that work, but I like working with larger audiences more and trying to explain Wall Street while still participating in it is much more gratifying to me. What you see as part of that is the industry that is just selling fear because it always sounds so smart. It always sounds like you’re so in the know that this currency’s going to collapse, even though the argument doesn’t make a ton of sense when you get down to the nuts and bolts of how your gold bricks are going to buy bread, beer and tea. That never made much sense to me, but at the same time, they’ve sold a lot of newsletters, a lot of books and a lot of gold-mining and gold-chip certificates. It’s the entire industry of the Doomsday scenario; they printed money for everyone except their investors.

Jason:
Right, well that’s true. I would agree with you there, and I tell you, those guys seem like they’re right because they’re just doing the math. This is not just about math. There’s way more going on in the world than math. You can talk about $17 trillion this and that and $60-$200 trillion in entitlement obligations over the next two decades. Yeah, fine, but it’s not math. This is not just about math, it’s about technology and it’s about battleships and nuclear missiles and the reserve currency and throwing one’s weight around. I’m not saying that’s right, I’m just saying that’s what it is.

Jeff:
Never forget that economics is a social science. We’re not doing moon shots here, we’re trying to figure out how people are going to behave.

Jason:
Yeah, very good point. Well, hey, this has been a great discussion Jeff, and give out your website and tell people where they can find you and read your great material.

Jeff:
Head over to Yahoo Finance. I’m there every day with Yahoo Originals and you can find my work, along with a bunch of other contributors. We’ve got kind of an all-star cast so I would encourage everyone to make it their homepage and check us out.

Jason:
Good stuff, well Jeff Macke, thank you so much for joining us today.

Jeff:
Absolutely, it was my pleasure.

AMA

AMA 97 – Patrick Cox Future of Medical Technology

 

Patrick Cox produces unbiased and independent research in the field of transformational technology. He has worked closely with Nobel Prize-winning scientists and economists along with having over 200 of his editorials appear on the Wall Street Journal, USA Today, and more. Patrick shares some insider science to Jason and his audience today and also talks about some very interesting medical advancements the media fails to report on.

 

Key Takeaways:
4:35 – Conviction and convenience do not live together, so you have to separate yourself from convenience.
7:10 – If you have plans to do great things, you are bound to find some resistance from your friends and family.
10:00 – You can’t get more in life until you are grateful for what you have today.
14:00 – Birmingham property tour is coming up and Meet the Masters event is coming up in January.
18:00 – There’s a lot of exciting things going on in science, but you wouldn’t know that because the media is very poor at reporting science.
20:10 – Social security is under estimating our life spans. In reality, people will be living a lot longer.
24:30 – The government is obsessed with not putting out a drug that may have side effects, which Patrick believes is absurd when so many lives are at stake. A possible cure with side effects is better than no cure when people are dying.
27:00 – The FDA has not adapted to the new model of how personalized medicine works.
30:10 – Scientists did tests on a chemical compound called anatabine and found it be the most effective anti-inflammatory agent ever discovered.
34:00 – There are a number of ways you can rejuvenate the heart muscles when they’ve been damaged. We thought for a long time that these could not be repaired at all.
39:00 – The Japanese are leading in rejuvenation medicine because they understand their citizens are getting older and fewer Japanese are being born.
42:15 – We have the tech crowd pushing against the roadblocks that cutting-edge medicine is facing.

 

Tweetables:

Whatever your goals are, you are bound to encounter some resistance from the people in your life as you are on your path.

It was thought that damage to the heart caused by cardiac events could never be repaired, but we know now that is not the case.

Rejuvenate medicine is really the biggest breakthrough of our era.

 

Mentioned In This Episode:

http://www.jasonhartman.com/

http://www.patrickcoxdna.com/

https://www.mauldineconomics.com/

 

Transcript

Jason:

It’s my pleasure to welcome Patrick Cox to the show. He’s editor of the transformational technology alert at Mauldin Economics and we’ve had John Mauldin on the show before. It’s great to be talking to Patrick about some interesting stuff today. We’re going to be talking about Apple’s new smart watch. We’re going to talk about longevity and what’s going on in that field and, you know, how this all interplays with the economy. Patrick, welcome, how are you?

Patrick Cox:
I’m fine, thank you, Jason.

Jason:
Good, good. It’s good to have you. Just give our listeners a sense of geography and tell us where you’re located.

Patrick:
I’m on Marco Island or maybe in Marco Island, which is about the same latitude as Miami. I’m on the west side of the state off the coast from Naples, if you know the area.

Jason:
Okay, fantastic. What are you covering mostly in the transformational technology alert newsletter.

Patrick:
Bio-technologies, disruptive bio-technologies for the most part.

Jason:
And what’s the hot topic of the day? There’s so much going on out there and it’s really just an exciting time to be alive. I mean, there’s a lot of exciting stuff that’s going on.

Patrick:
It is. It’s actually overwhelming. It is my job to keep track of it and I’m not sure that I do frankly. There’s so much going on. The point I try and get across to people is that everybody knows Moore’s law. Everybody knows that microcircuits double in power at a given cost every 18 months to 2 years. Well, bio-technology is actually making faster advances. The cost of a genome is falling at twice of the rate of, genome sequencing, is falling at twice the rate as the cost of a chip.

We’re seeing this across the board and all kinds of tools in bio-technology, but we’re not hearing about the results for a variety of reasons. One is that the FDA won’t let companies involved in the research say anything, really. So, you really have to dig to find out what’s going on, but it’s worth it because it’s going to have a pro-found impact on everybody’s lives.

Jason:
Is the FDA is saying that would be like a forward looking statement, because it’s kind of like a public company in a quiet period, is that why they’re not letting people talk?

Patrick:
Yes. That’s part of it. It’s a big part of it. The FCC and FDA are both very restrictive. My wife is a nutritional biologist and she call this phenomenon information hoarding and just about everybody in the profession hates it, but if you’re apart of a business, you’re really restrictive in what you can say, what kind of forecasts you can make.

Jason:
Right, no question about it. What is going on? What are some of the exciting things? It’s interesting that you say, it’s more exciting than what we’re hearing. Most people would think probably that would be the opposite. You know, they’d think, there’s all these people out there promoting their wears and trying to get attention in the market place. It’s actually a little bit more quiet than the reality, I guess, huh?

Patrick:
Well, you know, part of our problem is the media, which has never been good at covering science, is disintegrating. The profits in big media have disappeared. I’m proud of say I actually played somewhat of a role in that. I was at Netscape when we destroyed the dominant paradigm and did away with monopoly and information dissemination that was keeping the old media in power and now that’s gone.

As a result of that, however, the number of journalist who are covering science, even badly, had diminished. You have to read the journals, you have to be attending the conferences, you have to be talking to scientists to know what’s going on, but it’s worth it because we’re seeing true revolution in human life.

The important thing to understand though it’s a continuation of a revolution that’s been going for 100 years, during which time average health spans, life spans, in North America have doubled, but that would accelerate.

Jason:
It’s interesting the distinction you just made. It maybe more important that the health span has increased so much more than the life span, because people are living health, active lives right up until the day the croak and now if we can increase that life span and health span, move that up even 20-30%, that would be pretty amazing. Big implications for the economy too. Both positive and negative, I’m not sure.

Patrick:
Absolutely. You’re right. It’s a two-edged sword, but the pain is largely politically. Right now the social security administration is underestimating our actuarial lifespans, because it would make the debt over hangings appear even worse than we think it is and it is much worse than we think it is. The only solution to that given a rapidly falling birth rate and a rapidly expanding older population is we invest longer, we work longer. All of that is possible with technologies that already exist.

I’m not speculating about what’s coming around the corner, by the way. I’m telling you right now, if we had the permission to roll out these technologies, we can increase lifespans by decades.

Jason:
Wow, that’s amazing. So, what’s stopping us?

Patrick:
Government.

Jason:
Is it something as simple as FDA approval or what?

Patrick:
That’s a big part of it. Forbes magazine estimates that for every approved drug, the pharmaceutical industry spends $4 billion dollars. Now, some people say that’s too high and it’s only $1.5 billion dollars either way, it’s crushing.

Fortunately, the Japanese who are farther along this road, they have a much larger older population and even lower birth rates in America and Canada has recently done away with phase 2 and phase 3 clinical trials in the area of regenerative medicine, which may be, arguably, the most important area of medicine today, stem cell medicine. We’re seeing, out of necessity, governments begin to recognize the need to start looking for cures instead of trying to stop therapies to market, which is essentially what the FDA is doing today.

Jason:
Milton Friedman did some writings about the FDA years ago.

Patrick:
He was a friend of my, by the way.

Jason:
Oh, wow an incredible friend to have. Boy, wow. You must have had some conversations with him. Wow. I would have loved to talk to him if I could go back.

You know, he did some really good writings about the FDA and what you’re saying is very reminiscent of that. Why is the FDA getting in the way like this?

Patrick:
Well, this is the nature of bureaucracy. If you know Friedman, you know the iron triangle. Bureaucracy once created doesn’t want to go away. In fact it’s on impulses to self-interest. Bring up some other economists if you look at the public choice school, George Mason, bureaucrats and politicians act in their own self-interest and that essentially leads to the institutionalization of these organizations, which have enormous power over everything that we do.

So for instance let’s take viruses, there is a, there are several new technologies, brand new platform, completely new sciences that are off the radar. The average medical journalists are not hearing about them, DNA that seams, and then these contragate nanomole ligand structures that are in fact nano-tech machines, either one of these technologies, both of them have been proven in multiple animal models and because they work in fundamentally ways than the small molecule drugs, which we think of in terms of drug discovery and approval. I’ll just tell you they were working people. These companies can’t for legal reasons, but they were working people.

But, instead of rushing into market, instead of having these companies bring these new technologies to fight influenza, ebola, HIV, herpes, the government is obsessed with not being put in the position where they let something through that may have some side effect later on, which is an absurd position to take when so many lives are at stake.

Jason:
Yeah, it really is. So we’ve heard a lot of talk about super bugs, the scary proposition becoming immune.

Patrick:
That’s more..yeah. Bacteria.

Jason:
Bacteria, sorry, I got the two mixed up. Bacteria obviously, viruses are..

Patrick:
They do adapt. Viruses also can adapt, but normally when we talk about super bugs it’s bacteria.

Jason:
So, it’s interesting what you said about the viral aspect. Of course, all we really had for virus, as far as I know, is interferon, which is, of course, massively expensive.

Patrick:
It doesn’t work.

Jason:
Yeah, questionable too. Give us maybe your top three, if you would, your top three technologies that would extend life, extend health, and any more thoughts, additional thoughts, on what’s stopping these things from getting to the market place. I would just assume that all the creators of these technologies would just be pushing, pushing, pushing the FDA to get it out there.

Patrick:
Yeah and it’s really dangerous. If you offend the FDA, there’s no telling what’s going to happen because, bureaucrats and the FDA are human, they’re no different than any of the rest of us, I don’t want to paint sort of conspiracy, but they are, many of them are really well meaning and dedicated to public health, but they are incentives to avoid any kind of risk and what that leads to institutionally is way too much caution, especially in these days of personalized medicine. In the old days, you know, if you took a drug and it only worked half of the people and 20% got sick, it was failed. It was not allowed on to the market.

Today, we can take, with a small test, you can check gene expression and find out whether or not this cancer drug will work for you or not and give the drug just to those people who need it and for whom it works, but the FDA has not adjusted to the new model of personalized medicine, so..and cancers, there’s half a dozen new technologies that right now are paying tens of millions of dollars and waiting slowly through this swamp like labyrinth of regulatory process to get them to market, but I predict when they make it, which is in the next 5-10 years, cancer will be come a minor irritation. It will be, essentially, solved.

Jason:
What an amazing thing. Wow.

Patrick:
Cancer is already solved. By the way, since you bought up super bugs, bacteria, I think we will see clinical trials in the next 6 months that prove that is beating, both in terms of systematic infections, but also in terms of hospital acquired infections, there are topicals that can be used in surgery that will do away with most of them. This is a non-problem that media loves to, big scare story, and they’re incapable of looking at the science and tracking the companies that have solutions. There is one in particular that I’ve been following for 5 years that’s just getting very close right now and I can’t wait.

Jason:
What’s the name of it?

Patrick:
That’s Cellcuetix.

Jason:
So, that’s one. Do you have two more sort of leading things in any of these categories that you want to share?

Patrick:
I’ll give you two more. People pay me a lot of money for this, so that’s all I’m going to give you. One, because I haven’t been able to actually include it in the portfolio, which is an Alkaloid, which is being researched and moved forward by the Roskamp Institute in Sarasota, Florida. Roskamp is the world’s leading neurological research group. It was founded by Robert Roskamp who made an enormous amount of money by providing assist living facilities to mostly to Alzheimer’s patients and when he retired, I dunno 10-15 years ago, he put 100s of millions of dollars into an institute, hired two of the scientists who were responsible for the most important discoveries in Alzheimer’s and gave them probably the best equip lab in the world. I don’t know how many PhDs there are now, close to 100.

The best tools that exist, the most modern equipment and they’ve been looking at various approaches to Alzheimer’s. Someone came to them with an accidental discovery, which is an Alkaloid related to nicotine called anatabine. Now, they were as skeptical as I was when they first heard this, but they did the tests and what they found was it was the most effective anti-inflammatory agent ever discovered. Nothing comes close. Nothing comes close. It knocks down CRPs and because it’s a national product, it’s available for hundreds of thousands of people to use, but we know that it knocks down your C-reactive protein panels to useful levels.

So, for me it did away with my arthritis almost immediately. Changed my life. So, for four years this was available, expanding rapidly through word of mouth for the most part. A friend of mine here on the island went out about a week ago, he was using it; one of the effects of using it was to control really serious super (30:32-30:35) and within days of running out, because the FDA decided it was going to have to go through an approval process about 3 months ago, he had a stroke.

Other people are saying Crohn’s disease re-manifested itself, arthritis. This is a national product that everyone in your audience has eaten multiple times. It’s in tomatoes, eggplant, the nightshade family, the solanaceae plant family. This is a remarkable discovery, which I think is going to be worth many years of medicinal health stance, but the FDA decided based on a study that showed, beyond shadow of a doubt, that it prevents long-term brain injuries following a concussion, traumatic, TBI, brain injury, that it was obviously a drug, therefore had to be approved.

The company is in fact, the spin-off company, which is what Creek pharmaceuticals is in fact taking it through the drug approval process, but the FDA has apparently pressured the company to take the nutraceutical from the market in order to give them the IND, initial drug development, permission. So, now it’s off the market and it’s just a catastrophe. That’s one.

We’ll go now to the other end of the spectrum, which is stem cell medicine and that’s bio-time energy. If you’d like to see some of the stuff that they do, I have a web page called PatrickCoxDNA.com and if you go to that web page you’ll see pictures of my fiber glass skin cells taken from inside my left arms, which were engineered to become identical to the embryonic stem cells that I came from and then engineered into cardiomyocytes, heart muscles, heart muscle cells. I, in fact, have a video of my rejuvenated heart muscles cell beating in a dish in California.

Jason:
You really do like being the guinea pig. This is interesting that you do your own stuff. I love it.

Patrick:
I do. I could tell you more. There’s a lot more with this.

Jason:
I’m sure you could.

Patrick:
But those cells, rejuvenated, those are essentially zero year old heart muscle cells where as my heart muscle cells are 63 years old. So, we know animal studies and we know from experiments that if you introduce those cells into an aging animal, which I am, that they in-graphed and they express growth proteins that then repair the heart. So, until recently it was thought that damage to the heart caused by, you know, cardiac events, could never be repaired, but we know now that is not the case.

There are a number ways that English scientists have proven can be used to rejuvenate the heart, but these heart muscle cells and this video were just one of many that we can essentially, bio-time, take your cells, take them back in time to become immortalized embryonic light stem cells and then engineered them to become anything you need.

They have a subsidiary in Israel, which is working on retina fills to replace blindness caused by macular degeneration and we know that works. It’s only a matter in time before that goes into clinical trials. It could be knee joints, connective tissue, it could be liver, kidney, there really is no end to this. So, rejuvenate medicine is really the biggest breakthrough of our era.

There’s lots of more traditional kinds of medicine that I discussed before, cancers, I think Alzheimer’s we have a really good handle on. It won’t be one solution, it’ll be a number, because dementia is caused by a lot of different conditions of aging, but we’ll get that. So, that type 2 diabetes, obesity, all of these conditions are in fact solvable many of which with generative medicine, but that takes us to our cycle limit, which is a number of times our cells naturally can replicate. It’s about 120, which is the ultra centenarians that we read about live to be about 120, sometimes 122.

Jason:
So, is it replication only once a year? I thought they replicated every 90 days or something.

Patrick:
No, it really depends on the cell types. There are some tricks whereby the cell replicate once and that cell will split, but essentially you have 120 (35:56-35:57) in each of your cells. When you’re a kid, when your health, you have no inflammation, no fibrosis, you have perfect myocardial function, we’re on the solar cycle. As we get older, as we get sicker, inflammation, and all these other factors that start to affect where we age, then we will accelerate that process. Typically, then they will localize one organ, burn through all your (36:24-36:26) completely stop replication and you’re dying, but regenerative medicine can fix that. So really what we’re looking at, the end of the traditional 120 year limit.

Jason:
Amazing. This is really interesting stuff. When do you think we’ll see the dam-break at the FDA? And if it’s FDA that’s the problem, what other countries are doing this stuff and using these technologies?

Patrick:
Japan. Japan because they made a decision, and were criticized for it at the time, to not bring in immigrants, because they were afraid that these people would not assimilate. They were afraid that were going to bring people who were essentially hostiles for the Japanese tradition. At the time they were accused of being racist, etc. Now..

Jason:
They’d probably love some immigrants. They’ve got a huge demographic problem over there.

Patrick:
Well, it’s not clear that they would. I mean, they could, but they’re very selective. As a result of that, I don’t remember what their birth rate is, but I think it’s about 1.2. Their population..

Jason:
They’re dying.

Patrick:
..is plummeting. At the same time, their older population is growing and getting old, so they know they can not keep the promises that they have made to their older population.

Jason:
Neither can we, but we have the reserve currency so we can just print it. *Laughter*.

Patrick:
Yeah.

Jason:
Yeah, that’s a discussion. I agree, I’m just joking.

Patrick:
But, they face their problem. That’s one of the reasons the Japanese have been so focused on robotics. They knew they don’t have the labor to take care of all of these older people, so they put a huge amount of money into robotics to help care for older people when they’re no longer capable of taking care of themselves. However, that’s not going to fix everything, so they have really begun to reform to their regulatory process and started to think about encouraging important technologies rather than just discouraging them, which is what we in essence are doing in America and also in Europe.

So, it’s beginning to change. The necessity is forcing government, even Great Britain for example, despite the fact; on the surface they have national health care program, they’re broke and the people hate the health care system in practice, but not in theory, so they’re beginning to de-regulate a lot of various different medicines that are strictly regulated in the United States.

So, your question, when will the FDA reform? I think it will be shamed into it when other countries start to take business away from American, will begin to fold.

Jason:
It makes me wonder, you know, if I should be flying over to Tokyo to get some kind of longevity treatment, you know?

Patrick:
Well, at some point, this is October 1st that these new rules kicked in, so it’s going to take a little while, but the first clinical trial for stem cell therapy is already scheduled in Japan.

Jason:
Well, before you go, just talk to us of the significance of the Apple watch. You know, this whole quantified self-movement is pretty interesting and I think we just got a huge new tool coming our way that’s going to make it even more interesting.

Patrick:
Right, my interest in..I’m really exciting about this, but it’s not specifically about the Apple watch, more it is about the entrance of Silicon Valley, the IT crowd, into health care, because, you know, I worked in Silicon Valley and I have friends still stay in contact with them, the IT world moves fast. When something is happening, people work long hours and they rush, they want to be the first to the market. So, we saw what happened when Google spinned off 23andMe, tried to push genomics, genetic sequencing, interpretation for health into the market, which is they just ran up against this wall of FDA which basically lend to disaster.

That was a good thing, because it signaled to the industry what they were up against. Now we’re seeing with Apple, they’ve already withdrawn their health app and it’s probably for regulatory reasons. I don’t think it’s actually a bug in the software.

Other people are also entering into this phase by-times in-health applications. This really interesting startup with Eric Schadt from Mount Sinai genomic center in conjunction with the Weizmann Institute in Tel Aviv, which is the master databank of all genomic knowledge. Rafael (41:56-41:57) is the CTO who built really the first search engine, Excite, and is also very well known in the Valley and is now on board with this project.

What this means is we’ve got tech folk now coming up against the roadblock of regulatory resistance and that’s a good thing, because these people don’t take no the way the medical industry does.

Jason:
That’s great. So it’s really like a new vibe, you know, it’s like the tech community is different than the AMA, which has wanted to preserve it’s monopoly, it’s business, and so forth. It’s just a whole different vibe, it’s a different mentality, right?

Patrick:
It is, Google has announced they have a new startup with one of the board members from Genentech, who says we want to cure aging. When Google wants something, they pull out the stops, which means for the first time in our lifetimes, the medical establishment has allies in this desperately important task of reforming our regulatory agencies.

Jason:
And it’s interesting because the tech companies really have something to bargain with when it comes to the government. Google can just agree to let the NSA run rampant through the servers. *Laughter*. They’ve got something to trade, unfortunately. Of course, I’m being massively sarcastic and I hate that idea, as I’m sure you do, but I just had to throw it in for morbid humor if nothing else, but yeah, it’s really interesting, it’s really interesting. Well, Patrick, give out your website, tell people where they can learn more about your newsletter.

Patrick:
Well, if you go to Mauldin Economics, there will be some link. You know, I actually don’t know the URL.

Jason:
Okay, so just the general website, Mauldin Economics. We’ve had John on the show a few times, so you guys do great work there and keep it up. This is an interesting conversation.

Patrick:
Thank you.

Jason:
Thank you.

AMA

AMA 96 – Senate Libertarian Candidate Sean Haugh

 

Takeaways
02.00 – Jason Hartman’s personal risk evaluator model relies on construction cost and land cost, and this is a great way to minimize risk when investing in real estate.
06.30 – If you’re building in a higher price area, you’re going to have to pay your contractors more because they have to be able to afford to live in that area.
11.10 – Three sources of assessing your land value: tax collector or assessor for property taxes, an insurance broker – an insurance company selling you a policy based on the property, and an appraiser.
17.45 – If you’re interested in looking for the sorts of properties that can offer you regression to replacement opportunities, come along to the Birmingham, Alabama property tour in November.
20.10 – For more information specifically about risk assessment in investing, go to www.JasonHartman.com and type in ‘Hartman risk evaluator’ into the search bar to find podcasts and blog posts.
22.30 – Another recommendation for you is to look for the podcast and YouTube video about how to read a property Proforma. This is a really vital skill you can use to become a better investor.
25.20 – Surely we can’t go to war with anybody unless we have a direct congressional authorization?
31.00 – If we can reinstate America as a country of free trade and prosperity, we can give other countries reasons to work with us, not against us.
39.50 – With everything going on in the world, one of the most important things for us to do is work on empowering women.
47.00 – Being a Senator in the United States isn’t about having all of the answers – it’s about clearing the restrictions for the experts that do have the answers.
51.20 – Find out more about Sean Haugh by heading to www.SeanHaugh.com, Twitter: @EmperorSean or Facebook searching Haugh for Senate. You can also find his YouTube channel by just searching his name.

 

Tweetables
Let your lender haggle with the insurance provider to protect your collateral.
Regression to replacement cost is more like homeostasis – an equilibrium is created within the construction world.
The world is full of people using American weapons and American training to fight against America.

 

 

Transcript

Jason:  It’s my pleasure to welcome Sean Haugh to the show, he is the Senate Libertarian candidate from North Carolina, and it’s a pleasure to have him on. Sean, welcome, how are you?

Sean:  
Well thanks for having me, I appreciate it. It’s a beautiful day here in North Carolina.

Jason:  
Fantastic. Where exactly are you? Are you in Charlotte?

Sean:
  I’m in Durham.

Jason:
  Durham, fantastic, good place. Tell us about some of the issues on which you’re running and why they’re important.

Sean:
  Well, the whole reason I wanted to run was an act of conscience. I wanted to be able to walk to the voting booth myself in November and vote for a candidate who wanted to stop all war and stop spending more money that we have, and neither of the Democrats nor the Republicans can be counted on for that at all.

Jason:  
You’re definitely right about that, and war isn’t a very good deal or investment. Do you think war can ever really be stopped when we’ve got so much interest in it? Of course, the military industrial complex, the Central Bankers – there’s just too many people profiting from it, it’s a disgusting situation.

Sean:
  Well that’s why we have a republic – so that the citizens can take back control of their government and set these things straight. One thing that really bothers me and also motivates me to be in the Senate is that Congress needs to grow a spine. They spend all of their time bickering with each other and they don’t really do much of anything. From a return perspective – only having voted on seven bills in the last year, it might be considered a good thing. Congress has fallen down on the job of monitoring the executives as the executives conducts war. One thing that I feel very strongly about is that we can’t go to war with anybody unless we have a direct congressional authorization as the Constitution specifies.

Jason:
  Yeah, when did that change? When did the war powers move into the executive branch, where you can have these undeclared wars? Can you distinguish that a little bit for myself and the listeners?

Sean:
  I think it really started in World War Two, where we just started saying ‘Oh yes, the President can go ahead and handle it all’, but it really was with the Iraq wars too, where it just came out, especially after 9/11 when Congress just gave the President a blank cheque. They passed what they called a ‘declaration of war’ but it was more about whatever the President says, even if it’s ‘You can go out and kill those guys’. That’s not how it works. The authorization has to be very specific about who the enemy is, what the objective is and just how far the President is authorized to go. Right now we’re at the point where Barack Obama says he can kill anybody he wants to anywhere in the world without any oversight.

Jason:
  That’s a very terrifying idea that the President can have that much power: when he can command fleets of drones and everything else, of course. Do you think, though, if I may be skeptical for a moment here, has the world changed? Enemies aren’t clearly defined anymore. The terrorist groups aren’t really governments like they used to be when it was Japan or Germany. It’s not that clear anymore, is it? Has the world actually changed to where that rule needs to change? I’d like you to argue against that if you would.

Sean: 
 What has changed is that everybody out there – friend and foe, alike – is now armed to the teeth with American weapons and American training. We have interfered with the affairs of other nations so much  - it’s blowback. We keep intervening with the affairs of other countries, we keep inflicting war upon them and we keep creating greater resistant and a greater threat. Now we’re dealing with this Islamic State, which to me, is a government. They’re claiming territory and they’re claiming to be a government. They may not be drawn on the official map yet, but they are completely armed with not only weapons that we gave them directly, but also weapons that we left behind in Iraq. We’ve just repeated the same mistakes over and over again by thinking that we can manipulate these people and turn them into assets to advance our aims, and they always end up turning against us. First it was the Taliban in Afghanistan. We thought they were on our side: we armed them, we trained them, and then Osama Bin Laden was a CIA asset for a while and you can find articles about what a great guy he was etc. Now there are these photos floating around the internet of John McCain posing with people who turned out to be believers of this Islamic State, and he’s talking about how he’s so happy they made these great freedom fighters who are going to help us achieve our objectives of freedom and whatever else in the Middle East. Then he comes back and advocates for us to arm them.

Jason:
  Yeah, John McCain never saw a war he didn’t like. His answer to everything is “Let’s launch some missiles”.

Sean:  
And one of the first things that we really need to do as citizens is reject those politicians that led us into the last Iraq war. John McCain is very much top of that list and it amazes me that Hillary Clinton can get any traction at all because she’s just as much of a hawk as John McCain. This was done by both Democrats and Republicans – people especially in Washington are so locked up in this partisan battle that they lose sight of the fact that Democrats and Republicans are united on more war and more debt to pay for.

Jason:
  It’s just unbelievable. It’s like you said, with all of these assets: you wait 20 years and they become our worst enemies and they’re equipped with all sorts of information, tools and weapons which they would not have had, had we not interfered in the first place. The problem is we are where we are now, so what do you do now? They’ve got the information, they’ve got the weapons. Can we really live in a world where the US becomes more isolationist and just doesn’t engage in all this stuff?

Sean:
  I reject the term isolationist.

Jason:
  Okay.

Sean:
  I like to often quote Jefferson, who was paraphrasing Washington when he advised us to engage in free trade with all and entangle in alliances with none, and they always say that the definition of insanity is doing the same thing over and over again and expecting different results. We have to stop war, we have to stop thinking that bombing and droning is the solution to our problems. We have to stop thinking that giving arms to anybody is a solution. The first thing we can do to bring peace and stability to the region is to stop filling it with weapons and to cut off military aid to everybody out there. Also, if we stop our own wars and we stop interfering in these countries, then we stop giving them a reason to hate us and to arm themselves against us. If we, instead, engage these countries in free trade, then we help ourselves externally through the relationship with them – we give them reasons to like us and want to be like us. I’m 53. I remember when I was a kid, everybody wanted to be like an American because we were the beacon of free trade and prosperity, and if we go back to that policy, I think we can fairly quickly win people over because we can also undermine them from the inside. The average person will gain more prosperity and freedom and will see what freedom is like for other people, they will start doing that for themselves at home.

Jason:  
I agree with you, and what you didn’t mention is that that kind of prosperity also historically has the tendency to lower birth rates, which would be a good thing in this developing world. I was recently watching something about Belgium and how it is maybe, some predict, 10 years away from a real serious Sharia Law movement there, so they’ve got prosperity and the Muslims that have moved there just want to take over and institute Sharia. Not all of them, of course, I understand it’s a stereotype, but that’s what this documentary I was watching was about. It was pretty scary.

Sean:  
I haven’t seen the documentary so I can’t comment on it directly. I wonder if that particular fear is kind of overblown..

Jason:
  It might be.

Sean:
  But there is a problem in Europe. I’m much more familiar with Scandinavian countries, Sweden in particular, and how they failed to assimilate immigrants and people with different beliefs. Here in America, our whole core principle is founded on immigration, and it is that anybody from anywhere in the world can come here and become an American. Let me underscore that last part: become an American.

Jason:
  Good point.

Sean:  
They can come into our culture – they can keep their religion, they can keep a lot of their customs that they bring from home, but we have certain standards that we’re just not going to tolerate: oppressing people over race or gender, no cutting off people’s hands for stealing, no female circumcision that some people from African countries might want to bring here. In Europe, they have this cultural relativism that I think has really failed them.

Jason:  
I think we have that here too.

Sean:
  I think we do, and I think we need to avoid it. I think it’s important to establish moral standard. On the one hand, I don’t want us as the Federal government to be going to other countries and dictating their policy – that’s obviously failed. But as far as our own policy here in the US, well, yes. Everybody here has constitutional rights, or they have rights that are described in the constitution; I don’t want to make it sound like the government gives anybody their rights, but our government is a republic based on the idea that the first job of government is to protect the rights of the people. If we stay focused on that, then people can come here and like I say, keep their own customs up to the point where they start violating other people’s rights.

Jason:
  With ISIS, what would you do? If you were in the Oval Office, would you just ignore it? I understand the background, and I agree with you about blowback and so forth, but what would you do now?

Sean:
  I think bombing them is just not working, as tempting as it is. They’re willing to talk to some Americans – we’ve seen pictures of Senator McCain talking to them. Maybe we can send them Senator McCain as an ambassador to negotiate! This problem has been a long time in the making and we’ve done a lot to create it and unfortunately, there really is no magic wand or magic drone to just make it all go away. We have to begin the long term process of dealing with everybody from a stance of peace and prosperity. It’s going to take a little bit to undermine them. Bombing them has created more problems than it solved.

Jason:
  Okay, about the free trade issue. I want to ask you about that because I agree with you on the concept, but who are we not willing to trade with now, besides North Korea and Iran?

Sean:  
Cuba, I think is still on the list, and then of course we’re using economic sanctions against Russia over this Ukraine business. I like to bring up Cuba because to me, Cuba is a horrible example of how economic sanctions don’t work at all. All we’ve managed to do in the 50 years that we’ve imposed sanctions on Cuba is to encourage the communist government to make people poorer and to give them a reason to resent the United States.

Jason:  
Don’t forget we gave Michael Moore a great documentary saying that the healthcare in Cuba was better. Listen, I’ve been to Cuba. I’ve actually been there and trust me, you would not want to go there for your heathcare.

Sean:
  By being so antagonistic, we’ve encouraged the isolationism of those countries and if you look at a country like North Korea where the government has managed to keep a pretty tight control over the information that people have, and our involvement in the Korean war helped create that state, which has managed to perpetuate itself ever since that.

Jason:
  I agree, we should open up Cuba because the embargoes haven’t worked. That’s one thing that Obama was kind of intimating that he might do – though I guess he’s not doing that after all. What do we do with ISIS? What do we do with this radical Islam? That is scary! You look at the beheadings, you look at the stonings. I don’t know how Western liberals can support this kind of stuff. They’re just mixed up and clueless, I don’t get it.

Sean:
  There’s a lot of horrifying things going on all over the world. What sets apart our mistake here is that we did quite a lot to create it ourselves. You look at persecution of people for their religion all over the world and you look at non-Christian countries and what it’s like to try to be a Christian in those countries. There are people who get slaughtered over that. I mentioned female circumcision in Africa, we had the Kony scare there a couple of years ago and there were some horrifying things going on in Central Africa too, but I really think the best thing that we can do in terms of supporting our allies who have to deal directly with these sources is to pump them up economically. We have to show people around the world the benefits of free trade with the United States, and show them the money, basically. You show people the money and they’re going to flock over to our side. There’s one thing that’s very important to me, and especially about the Islamic world, and that’s empowering women because the Islamists just really hate that, but if you build up the economies there through free trade, they’re going to have to go back to a manufacturing base and they will have to hire women. I read an article during the World Cup that some entrepreneur in Pakistan heard that China, who was making all the soccer balls, was falling behind in production so he fairly quickly was able to put together a factory, get a contract to make these soccer balls for the World Cup and he employed all women because that was the workforce that was available for him. He took a little pride in giving women jobs. Once people start getting a taste of having their own money and their own economic independence, they’re going to want more of it and they’re going to demand it from their leaders wherever they live.

Jason:
  I agree. Women generally are a more peaceful force, except for Hillary Clinton! That’s a good thing. No question, empowering women is going to be a very positive thing, but I don’t know if it can be done. They’re not allowed to drive, they’ve got to cover everything up. It’s just a crazy level of oppression. They’re not even allowed to go to school. Why would men want women like that? Why would they want women to be like that? It’s just crazy to me.

Sean:
  Well, people do a lot of crazy stuff in the name of religion. We do crazy things in the name of religion here in the United States. The other thing that’s really important to me is to keep theology out of legislation. My spiritual beliefs are going to inform absolutely everything I do, and it’s obviously not as bad here in the US as it is in some Islamic states, but the reason I point to women in particular in those Islamic countries is precisely because of the theocratic forces where oppressing women is a fundamental aspect of how they operate. You look at Saudi Arabia – one thing that we don’t talk about at all is Saudi Arabia, because they’re supposed to be our good friends and allies, but they are about the worst in the world in terms of the rights of the average citizen. They impose the worst forms of Sharia law on people and fund the extremists that we end up fighting, yet we never say anything about it and completely ignore it because we want their oil.

Jason:  
It is mind-boggling the way we do that with Saudi Arabia. We can have, allegedly, 19 hijackers on 9/11 who are Saudi nationals, and nothing happens to Saudi Arabia. It’s just okay and Obama bows to Saudi kings. You couldn’t write fiction like this, it’s crazy.

Sean:
  We have a drone campaign going on in Yemen which is on the Arabian peninsula, but we won’t cross over into Saudi itself. Because we are slaves to their oil production, we’ve given them a safe haven to be able to train people against this and they will work directly against the United States. I’m obviously not advocating hostility towards Saudi Arabia, but I think we need to put it in the proper perspective and really question how our close relationship with them is really benefiting the United States. I think getting energy independence is a very important aspect of our foreign policy, and not to be owned by anybody else. There are other aspects of policy too, like our debt to the Chinese. It’s another example of how we’re giving up our sovereignty economically and we don’t have to do that.

Jason:
  I don’t want to debate the China issue because I think we’re kind of in the position of power there because the borrower always has control over the lender. Most people think about that the other way around. When it comes to energy independence – make a comment if you like.

Sean:
  I don’t disagree with you, and in a sense, I do jump from topic to topic, but I keep seeing these common things, and one of those is that we’re willing to let others outside of the United States dictate our policy to us because we’ve put ourselves in a bad economic position to do so. There are certainly advantages to Chinese investment in the US, as long as it’s investment. If people want to come here and invest their money in us and build up a national business, that’s a positive. But to simply be in debt and it’s such a huge mountain of debt that we need to get out from under. We can’t saddle future generations with that.

Jason:
  Just the last question on energy independence: how do we do that? Are we going to do that with unproven things like solar and wind, or are we going to work on our vast oil and natural gas reserves here? What’s the energy independence plan?

Sean:
  Well, the answer is yes. What we need to have is a free market in energy for governments stop gaining things in favor of the oil and gas companies and car companies for personal transportation. If we were able to take regulation away from alternative energy sources, then they would have an opportunity to innovate and create something. One thing I really resent about the possibility of being a Senator is that I would be expected to be an expert on everything because I would be ruling over everything. I don’t need to have the answers. I don’t need to know how to create an alternative energy model. In the United States, I need to try to get the regulations and restrictions out of the way for the people who do, so that they can go out and create this, and they’re smart people so they’ll do it in a way that is economically viable for them. If they can see a profit in it and a way to do it without harming other people or creating liability, then let it happen.

Jason:
  More power to them, pardon the pun!

Sean:  
Exactly. I’m not necessarily against the oil and gas industry. I’m for it as long as the people who are in business and know what they’re doing and are going to look at their billions of dollars can say ‘Yes, I’ve studied this and this is going to be a sound investment and we’re going to be able to do this without creating legal liability through any accidents we might cause’, go right ahead. Whether it’s drilling for resources from the ground or alternative forms of energy. I don’t feel like I have to have an opinion on that, and that’s the difference from people in Congress.

Jason:  
I like that. I think you’re right. That’s a good philosophy. They all act like know-it-alls, like they can be central planners and make all the decisions and decide that wind is the way to go. They’ll then set up a bunch of windmills that don’t work, that don’t finance themselves, they’re guillotines in the sky for birds – I don’t know why the environmentalists aren’t outraged about that!

Sean:  
One thing I don’t think gets talked about enough are the green energy scandals of the Obama administration.

Jason:
  Oh, with Solyndra etc?

Sean:
  They pick winners and losers and throw a lot of money away over bad investments.

Jason:
  No question.

Sean:
  Essentially they were trying to pick winners but it turned out they really didn’t know what they were doing. They were just there to scam the taxpayer because they managed to give a lot of money to President Obama’s campaign or to people he wanted to support. So much of this right now is ruled by corporate special interest, and that’s one thing I really want to be able to do. I want to replace everybody in Congress with people who are interested in the constitution and the rights and needs of the people, the citizens, as opposed to other rights and needs of their corporate interests.

Jason:
  Absolutely. Give out your website, Sean, tell people where they can find you.

Sean:
  I’m at www.SeanHaugh.com. I’m also on Twitter with the handle @EmperorSean and on Facebook – Haugh for Senate is the name of my page there. I also have about 2 dozen YouTube videos up and I only put another one up this morning. So you can just search my name on YouTube and you can find those.

Jason:
  Fantastic. That’s an obvious sarcasm with the Twitter.

Sean:
  I drop in every once and a while. I work as a pizza delivery driver and it’s a job that I really love because children just revere me. They treat me like the emperor of pizza. I’m driving around town and they all wave at me and I’ll wave back. I ring the doorbell and the kids cry ‘Yay, pizza!’ and after getting paid, that’s the best part of the job.

Jason:  
You are like the common man. That’s great!

Sean:
  Well, it’s important. These politicians only listen to each other. Once I started working with these people I realized that after about 6 years they lose track of everything and what the world is like. I’ll give you this one example: allegedly there’s this problem with scheduling part-time workers, such as myself, so a bunch of Senators tried to publish a mandate where employers would have to publish workers’ schedules within two weeks and guarantee them at least 4 hours a day and pay them. I work for a large corporation and I get my weekly schedule two days before the week starts, and that works fine. I’m not really being taken advantage of here, but they’re trying to run every little business in ways that they don’t even understand. I can just see that that is going to be a huge imposition on the company that I work for.

Jason:  
Yup, absolutely. Very good points. Well, Sean, thank you for joining us, and I sure hope we get some common sense back in government, and I just want to leave you and the listeners with a thought. There’s this constant debate about whether the government should be bigger, smaller, more activist, less activist, and everybody will agree on both sides of the aisle. Even the far left will pretty much agree that government is inefficient, it’s riddled with corruption and there are all sorts of problems, and so I just say this. If you want the corruption and the inefficiency to be less of an issue, just make the government smaller, because all of that will always be there in any human organization and if we just make it smaller, the bad things will be smaller too.

Sean:
  That’s exactly right. There’s a campaign about finance reform and that’s exactly what I tell them: the only way that you’re going to regulate money in politics is by abolishing the product because right now, with Congress ruling everything, it’s one-stop shopping for special interest. I’d much rather Congress not get involved with certain issues and then make these special interest have to appeal to millions of consumers instead of Senators and Congressmen.

Jason:
  It is absurd. My real estate company does market research on different markets around the US and ever since the bailout fiasco started in DC, the real estate prices have skyrocketed as every businessperson from around the world flies into Washington to get their money. It’s unbelievable. It’s so corrupt it’s absurd. We could talk forever, but keep getting the word out. This is important stuff. Thank you so much and I wish you luck in your campaign.

Sean:
  Well thanks so much, I really appreciate your having me on the show and thanks for what you’re doing.

 

AMA 95 – Consuelo Mack of PBS WealthTrack

 

The impact of technology and the future of development plays a big part in today’s Creating Wealth Show. Jason Hartman invites Consuelo Mack of WealthTrack to give her thoughts about China’s current state, the importance of a diverse investment portfolio and where technology will lead us in 15 years’ time.

 

Takeaways

01.53 – If the New World Order really is the Old World Order, it means huge implications for America.
06.55 – It is the US consumer that drives the economy – this means a strong, independent economy, regardless of the state of the rest of the world.
10.10 – China’s family policies will be their own downfall because in 10-15 years, there will be a huge demographic hole.
14.40 – Who knows where the latest innovations of 3D printing and the self-driving car could lead us?
18.35 – An investment portfolio needs a good level of diversification and well-managed real estate investment could make all the difference.
23.13 – Alternative investments are looking like an interesting option, but we still need to clarify all the details.
24.40 – For archived interviews and more information, head to www.WealthTrack.com

 

Tweetables
A country is really just a giant corporation.
Countries like China show us that we really need to consider the future when forming policies and regulations.
When dealing with Wall Street, or any sort of investing, always let caution be the word.

Transcript

Introduction:
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 blog post. We have a lot of resources there for you and you can find that at www.AmericanMonetaryAssociation.org, or the website for the Foundation, which is www.JasonHartmanFoundation.org. Thanks so much for listening and please visit our website and enjoy our extensive blog and other resources there.
It’s my pleasure to welcome Consuelo Mack to the show, she is Host and Executive Producer of WealthTrack on PBS, and aforementioned Editor and Anchor at the Wall Street Journal of the weekly syndicated business program, the Wall Street Journal Report. Consuelo, welcome, how are you?

Consuelo Mack:
Thank you, Jason, I’m fine and thank you for spending some time with me.

Jason:
The feeling is mutual, thank you. It’s great that you’re joining us, and I assume you are located in New York today, is that correct?

Consuelo:
Yes I am.

Jason:
I always like to give our listeners a sense of geography, because they’re all around the world. One of the things that you’ve been covering and thinking about lately, and I just love this, by the way, is this idea of an American Renaissance. There is so much innovation going on, and I think without a doubt, America still leads the world in innovation. Maybe that rugged individualism concept here is just so ingrained in all of us that it helps create innovation? Look at what’s going on in energy, the possibility of exporting oil – my God! Is that a switch, or what? What are your thoughts on this Renaissance?

Consuelo:
There is a tremendous change going on which is going to be with us for decades. It’s a positive change for Americans, but quite frankly, I think it’s also a positive change for the world. For the last ten years or more, we have been covering on WealthTrack something we call the ‘New World Order’. Unfortunately, the New World Order was that China was taking over as the driver of world economic growth. It surpassed Japan as the world’s second largest economy several years ago, it was rapidly growing, it was catching up to the US and while the US was not quite standing still, but was in a sluggish growth mode, it seemed that China was just going to take over everything. That has completely changed, and I’m glad of it. Right now, there are several leading economists on Wall Street who are saying that the New World Order has become the Old World Order and that the US is now and will be the driver of world economic growth for the foreseeable future. We’re talking about a long-term trend. There are a couple of reasons for this, and one is something that you alluded to. Number One: We have an energy renaissance in the US with the unleashing of new resources in petroleum-based products and natural gas and oil with fracking. We’ve also got the unleashing of oil and gas in shale formations, which is just a revolutionary technology. It means that the US is now in a position where it can actually export oil and gas and it’s also in a position where it is becoming the world’s leading producer of petroleum products and surpassing Saudi Arabia, even. It’s a tremendous advantage for the US, from both a national security point of view and an economic point of view. It means that fossil fuels, whether we like it or not, are still 99% of the energy source for the US and basically, almost for the world. It means that our energy supplies are going to be plentiful and are going to be cheaper. It gives us tremendous competitive advantage.
The second thing that’s happening, and it’s related to this, is that there’s a huge manufacturing renaissance going on. There’s a wonderful economist named Nancy Lazar, who’s the head of a firm called Cornerstone Macro. She’s been perennially ranked as one of Wall Street’s top-ranked economists, and she called the mid-West her favorite emerging market.

Jason:
[Laughs]. Interesting, I love that.

Consuelo:
Isn’t that great? Your favorite emerging market. So she picked the Mid-West because of this energy renaissance, and also because of the fact that we do have a system based on law. All around the world and in China especially, wages and costs of doing business have gone up, and there’s no transparency. There are tremendous corruption problems, there are tremendous pollution problems and the US is suddenly looking like a pretty darn good place to do business, and we are actually seeing manufacturers repatriating US works and they’re sending them to the Mid-West. The infrastructure there is good for manufacturing, and we’re also seeing major foreign manufacturers looking at the US, actually building plants here as well, and leaving where they used to be, which were places like China and India. It’s a double advantage, and these are long-term lasting trends so it’s just a great story for Americans and for the rest of the world.

Jason:
When you look at the technology side, two things that I think correlate pretty well with what you were just talking about is how we think we can look forward to a world of declining energy prices, amazingly.

Consuelo:
It’s amazing, it’s like a huge tax credit. There are few few points for consumers in business.

Jason:
No question about it, and I think it was Lockheed that announced that new breakthrough in fusion technology. That could be very exciting. I’m not exactly sure who it was, but anyway, it’s the idea of fusing atoms together, rather than splitting them, to make power – it’s clean, there’s no waste, it’s much more portable, it’s unlimited. They’re just amazing opportunities.

Consuelo:
It is amazing. There’s another facet of this, as well, in the US regaining the role of the leader in world economic growth and power, and that is the fact that we are looking at our economy. I know that a lot of investors are concerned about what’s going on in China, that it’s slowing, and also what’s going on in Europe – Europe could possibly even be entering another recession. Even in a very globalized economy, which we are in, the US is still more than 70% of GDP. It’s consumer-based, so it’s really the US consumer that drives our economy, and we only depend on 14% of GDP due to exports. In fact, there is a deep coupling that has gone on as well. There is fear that the rest of the world is going to drag down the US and again, because our economy is so strong and because our economy is so insulated with the consumer being the primary driver of the US economy, we will not in fact, be as affected as one would have thought. That’s another tremendous positive – we can be an independently strong economy, regardless of some problems that are going on in other parts of the world.

Jason:
Okay, as recently as just a few years ago, so many people were talking about the decoupling of China from the US, as if that would hurt us, and now you just see how the tables have totally turned. It’s really an amazing thing. They were talking about how China’s not going to buy our bonds, and they have great reasons for all of that. I would not blame China for a moment, but the fact is that we are their customer, and they are dependent on us, just intrinsically. I think this kind of trade is good because it will lessen the chances of war – people are (hopefully) not going to drop bombs on their own customers and vendors. Now with this decoupling, the thought is that it’s the other direction. Even though globalization, the experts say, has lifted maybe 275-300 million people out of property, and that’s great, they’re still not making the median household income in the US (about $52,000 a year, I believe). They cannot create their own consumer base; I think they’re just a long way away from that.

Consuelo:
Yes, they are. One of the problems that China has had is that they have two kinds of bubbles going on – an investment bubble and a credit bubble. We have gone through a very painful period of restructuring our financial system. As you know, the banks are still suffering, but they’re stronger and their capital base is stronger than it’s been in decades. China over-invested, it over-built and over-leant and now it’s going to have to go through its own restructuring period, and that’s going to be very painful and their growth is going to slow. That means that their personal income is going to slow. They’re on a slower growth track, even though they’re growing faster than we are – 6.5-7% GDP growth versus our 2.5-3.5%, but we have a much bigger and healthier economy. They’re starting from a much smaller base too. The tables have really turned, and it’s to the benefit of the US.

Jason:
That’s a good point, too. When you start from a smaller base, it’s easy to have big numbers.

Consuelo:
Absolutely.

Jason:
It’s much harder to get a giant corporation – which is really all a country is – to turn and to make surprising gains. They have to grow faster because of the size of their population and the threat of civil unrest with the Communist Party. They are very very concerned with that over there, and rightfully so. The other thing you didn’t mention about China – the other bubble that I believe they have is a major demographic bubble coming their way: populations depend on an influx of young people, either through birth or immigration. I don’t mean young people’s children; I mean young workers who are healthy and hardy and willing to work hard. Granted, we can bemoan Gen Y all day long, but that’s kind of another discussion. They need people who are going to work and advance themselves and make their way in the world, and who are going to start spending, buying things and forming families as they do that – even buying houses and upgrading their lifestyle all the way along. In China, you look down the road 10-15 years, and there is a gaping hole coming at them.

Consuelo:
Exactly, and the demographic problem is that one-child policy, which basically meant that there are many more men than there are women, which is just terrible how that happened.

Jason:
That’s not good.

Consuelo:
And now the Chinese leadership is awakened to the fact that that has occurred, but you’re absolutely right, there’s an entire generation of Chinese men that can’t find wives and set up those families that you just described and that are so critical to the health and the growth of an economy. That is a big problem for them looming, no question about it.

Jason:
Yeah, absolutely. So, other parts of the American Renaissance, if you will. Energy..

Consuelo:
Energy, manufacturing. One of the things that I know you specialize in is real estate, and there’s a multiplier effect with these energy jobs and the manufacturing jobs – for every manufacturing or energy job that’s created, they create at least 3-4 jobs, and we’re seeing a resurgence and a revitalization, community by community, because what it means is that they need services, homes, schools, and so they’re increasing the tax base. It’s an incredible multiplier effect that’s going on with this manufacturing and energy renaissance. It’s slow. As Nancy Lazar from Cornerstone Macro said, ‘It’s slow, but slow is good because it’s sustainable’. We’re going to see this kind of multiplier effect in communities all across the country, but especially in the mid-West. It’s a very positive situation, creating better paying jobs and actually creating employment in manufacturing. For the first time in 30 years, we’re actually seeing sustained employment increases in manufacturing.

Jason:
One of my favorite authors is Chris Anderson, who has WIRED magazine, and I think he’s written 3 books, the last one of which is entitled Makers. He talks about 3D printing and how that will start on-shoring manufacturing back to the US. I think he makes a pretty good argument for it. Of course this won’t be mass manufacturing – 3D printers aren’t likely to be building iPhones anytime soon, but Apple is in the process of moving iPad manufacturing back. When a Chinese worker gets paid pennies on the dollar versus an American worker, for any company to bring that manufacturing back here, at first I think it’s got to be a political thing – a gesture of good will or something.

Consuelo:
No, it’s not, they’re coming back here because it’s very competitive and due to the ease of doing business. I’m trying to remember – it’s one of the world organizations and they do an ‘Ease of Doing Business List’ every year, and the US is ranked number 4 by a whole bunch of criteria. China is ranked, I think, number 79.

Jason:
I’m wondering what 1, 2 and 3 are, if you remember.

Consuelo:
I don’t. It’s probably one of the Scandinavian countries. I think Singapore is number one, but they’re small countries, and we’re definitely the top-ranked largest company by far.

Jason:
That’s interesting, and I would agree with you. My friends that do business in China; I’ve got one friend that builds hotels there, another whose in manufacturing there, and of course every culture has its own customs and ways of doing things, but they do complain about the difficulties of doing business there so that’s an interesting point too. 3D printing – that could really bring a lot of this small, mass-customized manufacturing back to the US. I think that’s a pretty exciting part of the trend, and what you didn’t mention when you were talking about energy prices declining – I make a big deal out of this: the self-driving car. I think that could dramatically save on fuel costs and could just do all sorts of things for reduced fuel consumption. Because of the efficiency of self-driving cars, it’s like a computer network – it just works efficiently. Ultimately, in 10 years, that’s going to be pretty prevalent.

Consuelo:
I completely agree with you. I actually just had a very interesting conversation with Tom Gardner, who’s one of the co-founders of the Motley Fool, about the fact that we’re going to see a lot of software that is being developed, and most of it is being developed in the US, which is one of the points that you made earlier as far as the advantages that we have in terms of creativity and entrepreneurship in technology. We are still the country that is the most creative and innovative, and foreign workers come here because they recognize that it’s a very fertile, creative place to work. We were talking about all of the different industries that are going to be automated, including the financial services industry. Certainly, the self-driving cars, even though I love to drive and would have a hard time giving up the wheel, that is definitely in our future, and that’s another game changer. 3D manufacturing is just incredible. We’re trying to figure out how to invest in it, and it’s such a new industry, it’s difficult to pick winners. I think it’s just going to be huge.

Jason:
I do too, it really is. Okay, so are there any other components of this renaissance that you see? Geographically, you think the mid-West will be the biggest beneficiary, it sounds like – the emerging country of the mid-West, right?

Consuelo:
Yeah, and what was so cute was that Nancy – I keep quoting her, because she really was the one who coined the phrase, ‘My favorite emerging market is the Mid-West’ – it was Flint, Michigan that she said about initially, and again it’s because they have the infrastructure, they have old factories that can be restored, they have the transportation hubs with the rails and the road systems that trucks can come in and out of, and they’ve got the energy supply and the wiring for these factories. That’s why that’s the place where this is starting. Of course, we’ve got the energy renaissance that is happening in North Dakota, especially. It’s also happening in Texas, so those are the areas where we’re finding the new energy supplies. I actually just looked, Jason, and it’s the World Bank that ranks countries every year on their ease of doing business, and it’s based on qualities like the ease of starting a business, obtaining credit and construction permits, getting electricity, registering property, taxes, investor protections and contract enforcement, and the US is number 4. I got the China ranking wrong – it’s lower than I thought it was because China is actually ranked number 96. The US has tremendous advantages in that respect, as well.

Jason:
Anything else you’d like people to know what else you’re working on? I know you had maybe one or two other things that you were really excited about and really engaged in now.

Consuelo:
Right. You are the real estate expert, I am not, but one of the things that I think is intriguing on WealthTrack, and many of our guests who are basically the best in the business in terms of being investors with proven, long-term track records of success and financial leaders – one of the main themes that we have on WealthTrack, and that they do too, is how important it is to be well-diversified in your investments. Real estate is a very important part of one’s investment portfolio and most of us own our own homes, so we have a domestic real estate portfolio that’s right there right off the bat, and it’s probably one of, if not the, largest, investment we have. Where most of us don’t have any exposure is in foreign real estate. Everyone is basically going global if they’re investing in bonds, in stocks etc. International stocks are an important part of everyone’s portfolio, and international real estate is too because real estate is an aspiration around the world. Everyone wants to own a piece of property, and the world population is growing. Yes, I would not buy real estate in China because honestly I don’t trust the Chinese government and the protections that they afford, but there are other areas in Asia where real estate investing contracts are honored and there is a legal system with protections for private property. That’s one of the ideas if you ask anyone how much foreign real estate they own, everyone always says zero. However, foreign investment trusts run by reputable firms can probably be a good portfolio diversifier, so that’s one of the ideas that has come up on WealthTrack several times.

Jason:
You know, Consuelo, I have another show in my little mini media empire here, which is called the Jet Setter Show. The tag-line is “Exploring lifestyle friendly destinations worldwide”. I’ve been very fascinated by foreign real estate investment opportunities for many years – I’ve been to 73 countries now, having just returned from Peru, my 73rd. I’m always looking at deals in these markets and I’ve got to tell you, I just don’t see it. Look at the good old US – the infrastructure, the rule of law, the fact that we have a multiple-listing service. That is a huge deal other countries don’t have. We can really understand values here. In other countries, you don’t know. Everything is just so fragmented.

Consuelo:
I would agree with you completely as far as residential real estate. Again, I would only go with a firm that has a tremendous amount of experience in commercial foreign real estate, and there are such people and there are such firms. I agree with you as far as talking about residential real estate. I would never get involved either because you never know what the rules are, or what insider deals there are, or how the community is going to treat you, so I completely agree with you there.

Jason:
Right, no question about it. The other thing I’ve found is about the infrastructure in terms of the mortgage markets – they’re so much more mature in the United States and really, real estate has been subsidized here by the government since the Great Depression, so if you’re made about government hand-outs and you don’t like Obama and so forth, then go and get your own hand-out and invest in US real estate, because it’s basically subsidized!

Consuelo:
Absolutely, I agree with you there, I really do, and I would defer to you and your expertise in real estate, because it is not my area of expertise by any means.

Jason:
I think it was Will Rogers who said “Buy land, they’re not making any more of it”, so there’s something to be said for that, no matter where it is. I would agree with you. If you have time, is there anything else you’re really engaged on, maybe give out your website?

Consuelo:
Right, I just think that the one other area that is very hot right now on Wall Street is something called ‘alternative investments’. This means investments that basically are non-correlated with the stock market, and therefore if the stock market goes up, they tend to go down or balance. When the stock-market goes down, they tend to hold their value or go up. Of course, traditional alternative investments are things like gold, which is an insurance policy against extreme outcomes, as we call it. It’s something that probably everyone should hold a little tiny bit of. Then there’s the great ETF (Exchange-Traded Fund) called GLD as a symbol for gold, and that’s probably a good little insurance policy that can make up a tiny portion of one’s portfolio. The alternative investment space is becoming very hot and a lot of Wall Street farms are introducing mutual funds. They’re called ‘liquid alternatives’ because obviously you can trade them in hedge funds etc. They’re not transparent – there are very onerous restrictions as to when you invest in them and when you can get out of them. They’re only for wealthy individuals or institutions, whereas these liquid alternative investments are hedge funds in usual fund form, and I guess I would just add a word of caution. After the financial crisis they generated a lot of interest because people’s portfolios that were stock-centric suffered greatly so everyone was looking for a way to diversify. They’re interesting to look at, they’re interesting to talk about with these alternative investments and mutual funds with your financial advisers, but I would be wary of them because many are run by people who have not run alternative portfolios or hedge funds before, as well as tending to have high fees. It’s a hot area but it’s one that I would approach with some caution.

Jason:
That’s good advice. Let caution be the word on Wall Street, always, and with investing or anything, be cautious. They say a fool and his money are soon parted, right, so don’t be that fool.

Consuelo:
Exactly.

Jason:
Good stuff. Consuelo, give out your website, if you would, and tell people where they can learn more about you.

Consuelo:
Sure. It’s www.WealthTrack.com, and we have all of the interviews that we’ve done over the last 10 years (we’re now in our 10th year!) on public television. We tend to interview guests which don’t appear on other television programs or rarely do interviews, and we are very careful about who we have on – we vet them and they have to be the best in the business, must be respected by their peers and have terrific track records, they have to have integrity and we have to like them. www.WealthTrack.com is a good resource for long-term investors, and that’s what we’re trying to do: build wealth over the long term.

Jason:
Excellent point. Yeah, I love your work so keep it up, and thank you so much for joining us today.

Consuelo:
Thank you, Jason, you too. Take care.

Outro:
The American Monetary Association is a non-profit venture, funded by the Jason Hartman Foundation, which is dedicated to educating people about the practical effects of monetary policy and government actions in 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 media@hartmanmedia.com. 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.

AMA 94 – Bill Cheney of John Hancock Financial

 

Bill Cheney of John Hancock Financial guest stars on the American Monetary Association show today to talk about economics. Bill has been a chief economist for the company John Hancock well over the past 27 years and talks a little bit about his experience and where he sees the financial market in the future.

 

Key Takeaways:

2:30 – The current unemployment rate is understated because many people have their own solo-gigs or unsteady work.

9:25 – What Bill is seeing in his surveys are that people are more likely to invest and feel less concerned about today’s market.

12:58 – The stock market is not overvalued as long as company profits keep growing.

15:20 – Bill feels we are not a healthy economy yet, but we are a healing one.

21:00 – Over the years people have been able to buy more stuff, which is why inflation has been adjusted accordingly.

24:00 – The CPI is the best way to measure how much our lives have improved over the years.

 

Tweetables:

We’ll find the labor market getting tight, wages going up, and the unemployed people will start to get jobs again.

Oh, absolutely the economy is expanding, We still have positive overall economic growth. 

Creative destruction has become a lot less expensive than ever before.

 

Mentioned In This Episode:

http://americanmonetaryassociation.org/

http://jasonhartmanfoundation.org/

www.johnhancock.com/

The $100 Startup by Chris Guillebeau

 

Transcript 

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 blog post, we have lot resources there for you. You can find that at americanmonetaryassociation.org or the website for the foundation which is, americanmonetaryassociation.org/

Thanks so much for listening. Please visit our website and enjoy our extensive blog and other resources there.

It’s my pleasure to welcome Bill Cheney to show, he’s a chief economist at John Hancock Financial Services and Bill, I don’t know where you’re coming from, where are you coming from today?

 

Bill Cheney:

I’m from Boston, enjoying the spring.

 

Jason:

Well, it’s great to have you on the show. I just want to dive in here and talk a little bit, maybe first about, one of the most important things and that is employed. Your take on the job market and future prospects.

 

Bill:

Well, as you say. It’s one of the most important things out there. It’s important to real people, it’s important to the Federal Reserve, and it’s been a consistent source of disappointment for the last 5 years or so. Clearly, the job market is improving. The unemployment is coming down, which ever measure you use, whether you use the one that says it’s 6.7 or 12.6 or whatever. It’s coming down. So that’s all good, but it’s been kind of at a glacial pace and certainly we’re still at a level of activity in the job market that feels like a recession to a large number of people.

 

Jason:

That’s true and it’s so much harder to calculate nowadays, because so many people have their solopreneurial gig. They’re doing contract work and things are inconsistent. Obviously, look at unemployment, you can’t just say that, obviously you kind of alluded to the labor force participation rate, but also the issue of underemployment I think is a significant one where we’ve got people with masters degree serving coffee at Starbucks. That’s not how it should be, right?

 

Bill:

Absolutely that’s not how it should be. I guess I have to say that over my career I’ve lived through quite a few recession and in almost every recession we have that phenomenon. People losing their jobs, it’s harder to get a job, and people are willing to take jobs who are beneath their qualification level. That hopefully changes as things pick up, as you get closer to something you might call full employment, and I think in every cycle, it feels as if it’s going to be forever. It feels like it’s never going to get better, but so far in my life, every time it does get better.

 

New opportunities emerge and people start getting better jobs as well as more jobs.

 

Jason:

Well, that’s good to hear. I’m sure you’re familiar with the ride sharing service Uber, right? Do you use that in Boston?

 

Bill:

Right. I haven’t used it, but I have read about it.

 

Jason:

It’s a pretty neat service, Lift is another neat service that’s a competitor of theirs. It just strikes me as amazing whenever I use the services I always talk to the drivers. One of them just recently used to be an investment banker on Wall Street and now he’s driving a car for Uber. I thought, “Wow.” Talk about a change, huh?

 

Bill:

Well, absolutely. Again, I think this is something that you just have to realize happens in every cycle. In 1980, you were hearing all these stories about people with PhD and physics driving cabs, subsequently the physicists all got jobs on Wall Street and it was people of other kinds of advance qualifications to ended up in the cab in the recession. I think as I say that the normal progress of things will be, unemployment will come gradually down, gradually down, and eventually almost without noticing we’ll find the labor market actually got kind of tight, that wages are going up, and the people who were viewed as almost unemployable will start to get jobs again, kind of like the late 90′s.

 

The problem is for any individual, it doesn’t mean your skills will end up being worth anything and that’s really the problem. From one decade to the next, different people find that theirs skills are in demand and some significant chunk of the population like former cab drivers, may find that their jobs are going away to Uber or some brand new competitor that we haven’t even thought of.

 

Jason:

Yeah, it is amazing. I mean, there’s so much amazing technology and so much innovation coming out of the world today. It’s very exciting, no question about it, but it makes for a very quickly changing demand level in the labor market and the skills are always changing. The one thing that I think we can all agree on is that spending a fortunate on college and going into a massive amount of debt for a liberal arts degree is probably a pretty bad deal. Argue with me if you wish, but ah.. *Laughter* . It just kills me to see that kind of stuff.

 

Bill:

Yeah, I’m not 100% certain about that, but I do think you’re probably right. I certainly feel as though there’s been something out of quilter in terms of the rate of which colleges costs have gone up. It’s not that liberal arts degree is a bad thing, I think that a lot of contexts in which it can actually be a valuable training for how to acquire and use knowledge of which maybe transferable to a lot of other activities, but the cost is out of sight..

 

Jason:

Is absurd.

 

Bill:

The cost in particular has not been, does not seem to have been affected by all the technological advances which have driven down the cost of doing business in other sectors. I think, it’s unclear at this point whether that’s inherent in the nature of education or whether it’s because of the institution or the restrictions that we have in terms of accreditation and sort of hostility to massive online courses and qualifications acquired through for-profit institutions. I suspect there’s going to be a lot of competition in education and it’s actually going to drive down the average costs. Going to Harvard will still cost a fortune, but a degree, a useful degree, may get cheaper.

 

Jason:

I can hardly wait to see that, Bill, and I just have to think that these people in the ivory towers of academia are shaking in their boots with what’s going on. I mean, the fact that they can’t sell education at lower prices when they’re doing..so many colleges students are taking their courses online now. There’s a completely scalable, inexpensive delivery process, and then you look at all the free education out there. I’m a huge fan of the Khan Academy and there are many other things out there that are doing this too.

 

The real thing that’s allowing this monopoly to still exist is the government, student loan entitlement complex, because they’ve driven up the prices. If the government didn’t insure student loans, the money wouldn’t be out there for the universities to grab, and the cost of college would be set by the marketplace rather than some ridiculous amount of pell grants and all these different scholarship options. Gosh.  We don’t need to make this the topic of the discussion, but isn’t it frustrating? *Laughter*.

 

Bill:

It is also a frustration and it’s so clear that you know, if you dump a lot of money into a given system, whether it’s education or health care or housing, space travel or something, is the first thing you tend to do is to drive up the price of the scarce resources that are used in producing them, like professor salaries, astrophysics, or whatever it may be, or houses. Those things are all very much driven by the availability of funds to buy them.

 

Jason:

No question about it. Let’s get your take on some major parts of the economy and what you see, because you have feedback investors, your company’s clients, also, of course, your own research and your own thinking. What’s the sentiment out there in terms of the stock market, the overall economy, housing?

 

Bill:

Well, we sponsor a quarterly investor sentiment survey to answer precisely those kinds of questions and we ask questions of a decent size sample of people who have not huge incomes, but sort of decent middle-class incomes and a chunk of money to invest. What we’re seeing, which I think is consistent with my reading of the overall economy, is that they’re steadily feeling somewhat better.

 

From one quarter to the next, it seems like people are getting little less worried about the things that worry them, a little more confident about their financial status in the future, in particular in retirement, and therefore, I guess, a little bit more optimistic about investing in what would other wise be considered very risky assets like stocks and houses.

 

We are seeing that marching along. Now, it’s not that anybody thinks the happy days are here again. People are still very worried about politics in Washington about the natural debt, about health care costs, about potential changes to social security, about oil crisis, there’s a list. The intensity of those concerns seems to be going down at a time, each quarter we see a slightly smaller percentage of people being concerned or very concerned about those issues.

 

To me, it’s a valid reflection of the fact that, despite the gloom and doom talk that we’ve lived through after the financial crisis, the worst scenarios did not come to past. You’re always worrying another recession or some financial meltdown happening else where in the world and sucking us down in a vortex all over again, and those things did not happen.

 

Jason:

I don’t know. You sure? A lot of people into foreclosure, lot of people walked away mortgages by choice, the banks got a lot of tax payer money. I don’t know, isn’t that the vortex? *Laughter*.

 

Bill:

I think because things were so uniquely awful that was why there was such a high level of fear about things really going down the tubes, but if you compare now to early 2009 when President Obama was being inaugurated for the first time, it really felt as though we were just skimping into oblivion, we were facing the re-run of the 1930′s, and we didn’t.

 

We had some very dark consequences as you say for mortgages, employees, and so on, but the unemployment rate peaked at about 10%. In the 1930s, it was 25% and it wasn’t obvious at that moment that we weren’t going to be 25%. I think the darkest fears, which of people were both peddling and just feeling on their own now, not crazy reason, those darkest fears were not what came through. What did happen was not good. I mean, we’ve been struggling, trying to recover in a way that, I think, is deeply disappointing and probably means we didn’t do all the right things; but one way or another we’ve been on this gradual struggle of things getting a little better each year, from what year to the next, to the point where now it seems to me that the economy is poised to grow significantly faster.

 

I think people are better off in terms of  health prices and equity values and therefore are all on pay plans, if they have them, companies value sheets are pretty strong, banks have kind of recovered, so the things that were holding back the economy the last couple of times started to recover, I think, are probably easier now. I think that’s what’s been reflected in that survey of investors, I think that’s what’s really going on.

 

Jason:

So, what do you think about stocks though? So many people are saying that the stock market is overvalued at this point.

 

Bill:

I certainly see the reason why you’d worry about that and it’s certainly is true, while I think the stock market is a decent proromiter of how the economy is preforming, it certainly gets ahead of itself sometimes. The poster child of that was the 1999 – 2000 period. When I look at sort of economy wide top-down look at the stock market and look at the total value of all corporate stocks rather relative to the total value to all corporate profits, it doesn’t look that far out of line from historical averages.

 

Now, historical averages are just historical averages, I mean they’re not..they don’t prove that they’re going to stop at any particular level, but it does suggest to me that stock values are not radically out of line provided that companies can go on making the profit margins that they’re doing now. If profits should drop for any reason, then the stock market would turned out to have been overvalued, but if corporate profits keep on raising at the kind of pace that I think is likely in an expanding economy, then I think we’re going to find that stock prices were reasonable enough and probably just as likely to go up or down.

 

Jason:

Are you saying that from a Price to Earnings ratio perspective?

 

Bill:

Well, it’s sort of like Price to Earnings ratio when I look at these economy wide numbers, but they’re not the PE ratios that you’d get from financially report anywhere. It’s more the numbers which I pull out from the National Income Statistics the things that go into GDP, sort of total corporate profits and total value of corporate equities. I think it’s kind of like a PE ratio, it’s the same idea, but as far as I’m looking at it, that ratio doesn’t seem to be out of whack with history.

 

Jason:

You made a statement a couple of minutes ago about an expanding economy, so I was wondering if you have any thoughts on…Do you think the economy is expanding now?

 

Bill:

Oh, absolutely the economy is expanding, I mean, we still have positive overall economic growth. GDP is kind of a fuzzy concept, but it is expanding and in the meantime, we are still seeing job gains. If we get a 190, 200,000 jobs a month that is definitely a sign of a healing economy. I don’t know whether I’d say healthier yet, but certainly healthier than it has been.

 

Jason:

You said the GDP was a fuzzy concept and I agree with you. My question was a bit of a trick question, I’ll admit, because I wanted to ask you, Bill, your thoughts on the real rate of inflation. I mean, do you go with the governments number, the official states, the CPI, or do you have your own thoughts as to what it really is?

 

Bill:

I think the CPI is about as good an estimate as you can make, I noticed a lot of us economists like to talk about what we call, the core CPI, which means excluding food and energy, which obviously annoys people a lot, because well of course. *Laughter*.

 

Jason:

Yes. It annoys me. *Laughter*.

 

Bill:

I have to pay for food and energy and the point is not to pretend that food and energy don’t affect the cost of living, but the point is is that they’re both kind of volatile and they don’t represent a very good predictor of what inflation is going to be the next month. If you’re looking what inflation is like, it could be six months down the road, you get a better idea from filtering out all the fluctuations of food and gas prices and looking at the trend underneath that. Now, you have to come back ultimate and look at what the actual overall level really is to get a grip on the cost of living.

 

I think the reality is that in fact inflation is remarkably low right now. There are some components of it like, what we were talking about before, college tuition, which are still going up way too fast. Health care costs have actually slowed down, but they’re still going up faster than the overall CPI, but all these different items are weighted together in, I think, a more or less in an accurate proportion to how big they are in the average person’s budget.

 

If your budget happens to be heavily weighted towards two college age kids and some health problems, then you’re all facing extremely rapid of increase in prices, but if your kids are either out of college or a long way from college and you’re all healthy in the family and you’ve already got a fixed rate mortgage and etc, then you’re facing very little inflation at all. I think it averages out to what the government is telling us.

 

I would also add actually that a bit of inflation is not the worst thing. I think the idea that we would all be better off with zero inflation or inflation particularly hurts the less well off, I think that’s a mistake.

 

Jason:

I buy the Phillips Curve argument and I agree with you to a small degree and I think ultimately inflation is a really good business plan for governments, especially those we are irresponsible, because that’s all of them. They all like to palter and buy votes with money they can print. So it’s a pretty good business plan really. It’s better than the alternative, it’s better than deflation, which I think is a pretty scary thing because it causes people to put off decisions, closes the philosophy of money, and that can have really traffic consequences in many ways.

 

I won’t argue with you there, but the reason why I asked you about growth and do you think the economy is growing, a very generic question, and then about inflation is because when you look at inflation versus GDP, regardless of what you think the real GDP is or the real rate of inflation, are we just trending water? *Laughter*.

 

Bill:

Well, honestly I don’t think we’re just trending water. When you look at the underline sort of real variables, are people getting more…able to afford more stuff or better stuff overtime? I think the answer is actually yes, but if you look at a car that you can go out and buy now for whatever, $25,000 or something, it’s going to be a whole lot better than a car you could have bought 15 years ago. There’s all kinds of extra features and safety measures and the same is true with the stuff you can buy with your health care dollar. It’s better than it was in the past.

 

You’re getting all these dimensions of progress quite apart from the sheer scale of the economy. In fact, we’re creating jobs and producing more stuff. You can argue whether, you can get into a more Buddhist argument about whether more stuff is actually good for you, you know from the materialist perspective of, an economist preservative, we are producing and getting more and better stuff over time.

 

Jason:

Well, true. That’s what the people that run the inflation indexes would say is that should be adjusted with hedonic and so, I mean do you believe in that? The concept of hedonic adjustments?

 

Bill:

Well, that’s a tricky question too. I mean, I do believe in it for precisely the reason that I was giving you. You can look at a basket of good and say, “Well, this would only cost you x dollars in 1965.” but then you start looking at it, that basket of goods in 1965 would have been junk. You wouldn’t have accepted 1965 quality healthcare now.

 

You wouldn’t probably even be allowed to drive an 1965 quality car in many cases now. Things really do change over time and to a considerable extent they represent improvements that should be reflected in price indexes, but we’re not really good at reflecting in reductions over time, which probably should be attributed to the service sector in many cases. I don’t think..

 

Jason:

What do you mean by that?

 

Bill:

Well, I mean. There are certainly components of the economy where we’re all pretty sure that we’re getting worst service than we used to a generation ago, when..

 

Jason:

Yeah, I don’t really know if that’s really true either by the way.

 

Bill:

Well, it’s true in some cases, it’s definitely not true in others. If you think of financial services and how impersonal and obnoxious banks are, but at least they’re open and you can go to the ATM.

 

Jason:

And they’re open longer! When I was younger, the bank used to close at 2-3 o clock in the afternoon.

 

Bill:

Exactly, there used to be bankers hours and now bankers hours are pretty long. In a lot of ways I think hedonics are a very complicated question in terms of what is the quality of goods and services going up or down or sideways, but commodity by commodity I think it’s actually quite important for the statustitions to measure the stuff and try and reflect it in the prices of services that go into the CPI.

 

Jason:

That’s an interesting thing that you just said, I just want to purpose a different idea to you on hedonic adjustments and we don’t have to go into this too deeply. I know we have to wrap up here, but I believe logical hedonic adjustments make sense, I don’t argue with any that. However, when you look at the big picture; you mentioned the Buddhist argument about materialism and so forth, so I’m going to give a big picture idea too; and it kind of says that we’re not entitled to progress.

 

Why should the progress be adjusted into the index to make the inflation look lower? If we get a computer that’s twice as fast nowadays as we got two years ago and the index only says it really costs half as much of their version of real dollars, doesn’t it say, “I’m not entitled to that progress?” Aren’t we entitled to have everything get better, and cheaper, and faster, more useful?

 

Bill:

I don’t know whether I used the word entitled, but certainly the whole point of the economy is to deliver more, better, faster, whatever, is to make our lives ‘better-er’ at the time, but I think the point of the CPI is to measure how much better. It’s not a pretense. If the price of everything goes up by a factor of two, but everything is also better by another factor of two, then you want to figure that in to any estimation of how good your life is economically, what your standard of living is.

 

The point of the CPI is be able to pull out of your estimate of the increased standard of living, the part that is just the change in prices, but you don’t want to pull out of it the part of it the improvement of healthcare services or the..now I mean, computers. I do have a problem with that because I’m not sure the increased power of the computer, if it’s twice as powerful, that in any sense is twice as useful. There’s some quirkiness there in the high-tech area.

 

Jason:

There is quirkiness and especially because all of our competitors have it too, so if we’re in business and our computers are twice as fast, so are our competitor. It’s really the same, we’re just playing on a level playing field. You’re the only one with the fast computer right and have some big advantage in the market place.

 

Bill:

Of the business that’s true, but the point of the CPI is to measure the cost of things to final consumers and the fact that I just bought a new mac to replace my 7 year old mac and it’s way better. I mean, it’s more fun, it’s quicker, it enables me to do things, I mean, the old one wouldn’t even TurboText, so I’m better off now with that new computer, even though it didn’t cost any more than the old one did 7 years ago.

 

Jason:

Yeah, makes sense. Make sense. Well, listen, I’ve kept you a little longer than we originally planned, so I apologize for that, but this is an interesting discussion. Before you go, first of all, give out your website if you would, Bill.

 

Bill:

Absolutely. If anybody is interested in our investor sentiment index and any other information about financial products, go to JohnHancock.com. That’s the company website, a simple name.

 

Jason:

Just maybe one more thing, before you go, whatever you want, concern about the national debt, healthcare costs, do investors think it’s okay to buy big ticket items right now? Whatever you want to just wrap up.

 

Bill:

Yeah, our surveys are showing investors on the whole feel like this is a good time to buy big ticket items, to buy a home, which of course is the biggest of big ticket items for most people. They do perceive this is a good time to taking a little more financial risk than they would a quarter ago or two quarters ago, but it’s still kind of on the edge. Most people are still very curious about the idea, for example, of starting their own business.

 

Jason:

The nice thing about starting a business nowadays though is that it’s so inexpensive. I mean talk about deflationary pressures of technology, huh? You can start a business and…like there’s a book that’s called the $100 Startup. It’s kind of true! You couldn’t do that 10 years ago!

 

Bill:

Yeah, that’s right. I mean that’s one of the huge benefits of technological change is now you can outsource everything buy the drink, à la carte. If you need a little bit of computer services, a little bit of computer storage, a little bit website, as you say, next to nothing.

 

Jason:

That is a fantastic thing and overall it leads to a lot more innovation, because all of those entrepreneurs with ideas can come out of the closet if you will and bring their ideas into the market place whereas a lot of them couldn’t be. That just bodes very well for the future. It gives me goosebumps thinking about..we’ve seen what’s happened over the past 5-7 that technology has become really, really exciting and it’s only going to get so much better in so many areas.

 

Bill:

Yeah, I am absolutely with you on that. I think the ability of young people to create apps and start a business or almost anybody that’s start a business and see if it flies and if it doesn’t, no great loss.

 

Jason:

What Joseph Schumpeter called creative destruction. Creative destruction has become a lot less expensive than ever before.

 

Well, Bill Cheney thank you for joining us today, really interesting discussion.

 

Bill:

My pleasure.

Lower Credit Standards: Economic Boost or Bust?

Can Lower Credit Standards Hurt the Economy?We’ve always been told that success depends on setting high standards.

Lowering your standards, so the conventional wisdom goes, leads to accepting low quality and ultimately bad outcomes. But in a bid to offset a sluggish recovery, the US government is advocating just that, with proposals on several fronts to lower borrowing standards to make credit available to more people and stimulate consumer activity.

Risky Lending Led to Collapse

The flip flop on borrowing standards comes in the aftermath of the much publicized housing collapse of 2008, when lax lending standards and greedy lenders put complicated mortgages in the hands o unprepared home buyers. After many of those borrowers found themselves underwater or in default, the housing market collapsed.

After that crash sent ripples through the entire economy, the US Department of Justice and a number of state-level attorneys and legislators took at hard look at those wild and wooly lending practices and found many of the perpetrators guilty of outright fraud or grossly misleading borrowers – or both.

Investigations and lawsuits followed, charging the nation’s major banks with a variety of criminal and civil misdeeds. In an effort to hold lenders accountable, the Dodd Frank Act of 2010 and similar legislation imposed new and stiffer regulations on lenders and new protections for unwary borrowers.

Tighter Standards on the Rebound

Mortgage lending, as the leading culprit in the crash, fell under the greatest scrutiny. The Qualified Mortgage Rule was implemented in early 2014 – a standard for mortgage lending put in place by the Consumer Financial Protection Bureau, an outgrowth of Dodd Frank. It mandated that for a lender to have some protection from prosecution for bad loans, its loans had to be held to higher standards in terms of creditworthiness, debt to income ratio and down payments.

The goal, regulators claimed, was to prevent unqualified borrowers – those with lower credit scores and lower incomes in general – from taking out mortgages and other big loans they couldn’t handle. That way, the toxic combination of risky loans to unprepared borrowers couldn’t trigger another massive collapse.

For a while that plan seemed to be working. In 2014, the Federal Reserve hauled back on its ongoing stimulus plan. Interest rates stayed low. Employment picked up a bit and home prices started to rise. But in the midst of these promising signs, another trend emerged.

Fewer mortgages were being approved. Home prices were beginning to rise, housing starts were up – but people weren’t buying. In other areas of the economy, too, things were slowing down. A soft job market meant that people couldn’t buy homes or make other big purchases – a trend that was accentuated by the massive burden of student loan carried by many new college graduates.

Lower Standards to Stimulate Buying?

Worried economists suggested the slowdown in consumer activity could signal another collapse, this one ironically triggered by the efforts made to prevent it. Faced with that possibility, government decision makers opted to accommodate a disheartening status quo.

The old Serenity prayer asks for grace to accept the things that can’t be changed, and the Federal Reserve and lawmakers on both sides of the aisle had to admit that in a rocky economy, credit scores weren’t going to improve much. And the fact that a growing number of middle and lower class consumers had no borrowing power all but guaranteed a slowdown in economic growth.

So the Federal Reserve mad the unprecedented move in the spring of 2014 to request the Fair Isaac Corporation, originators of the most powerful credit scoring system in the country, to adjust FICO scores downward. That would reduce the impact of things like foreclosures and missed payments on an individual’s credit report, and allow more people with a slightly iffy credit history – or none at all – to meet the minimum standards for qualifying for a loan.

That move comes as more lenders have been choosing independently to work with borrowers who have been through foreclosures due to the collapse, or who have struggled with being “underwater” on their mortgages. And now, the Federal Housing Finance Agency, the regulator that oversees government megalenders Fannie Mae and Freddie Mac, is pushing for new agreements to reduce the minimum down payment requirement for a home loan to just 3 percent along with loosening credit standards for loans handled by the two agencies.

That, say FHFA officials, would make it easier for lower income borrowers to get loans to buy houses and other major consumer goods, which would jump start the housing industry and other sectors – and that in turn would get the economy humming again.

Another Collapse on the Horizon? Maybe

But critics of these moves point out that lowering standards is more of an “if you can’t beat ‘em, join ‘em” game that sets up conditions for another collapse. Rather than simply opening the doors to less qualified borrowers, they argue, consumer agencies and the government should focus on efforts to improve borrowers’ ability to manage credit and earn more.

But regulators from FHFA and other bodies point out that the reasons for so many borrowers’ credit and income problems stem from the original collapse – and adjusting standards downward is just an acknowledgement of that new reality. Helping these individuals to get back on track helps the economy as a whole, they argue – and that’s a boost for everyone.

Will lowered borrowing standards mean a boost, or a bust, for the economic recovery? It’s far too soon to tell. But financial experts also point out that it may be a slippery slope with no way back. But with lessons from the past clear and recent, short-term relief for some could mean long-term benefits for everyone. (Top image: Flickr/EGlobe Travel)

Source:

Light, Joe. “ Fannie, Freddie Near Deal to Lift Limits; Concerns Persist.” The Wall Street Journal. wsj.com 17 Oct 2014
Read more from The American Monetary Association:

US Dollar Rides High in World Markets

International Conflict Hits Americans in the Wallet

The American Monetary Association Team

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AMA 93 – Former Department of Justice Attorney – Sidney Powell

In the today’s American Monetary Association Show, Jason Hartman speaks to author and former Department of Justice attorney, Sidney Powell. Together, they dive into some of the most scandalous and outrageous cases which have based through the Department of Justice in recent decades. Step-by-step, they overview several of the cases featured in Powell’s book Licensed to Lie: Exposing Corruption in the Department of Justice and consider the true state of our society.

 

Takeaways

01.30 – Sidney Powell’s book, Licensed to Lie: Exposing Corruption in the Department of Justice, deals with some of the most scandalous and historic events to come out of the United States’ Department of Justice.
9.50 – Within the Merrill Lynch case, it got to the point where favourable statements were hidden for six years while four Merrill Lynch executives were sent to prison without even a listed criminal offence.
13.30 – Sometimes there are two sides to a story and you need to dig a little deeper to find out what really happened.
17.25 – You have to question when a judge says he’s never had such a fine person before him for sentencing, and then passes a sentence.
20.50 – www.pogo.org (Project on Government Oversight) has identified over 400 instances of misconduct by prosecutors in the last decade.
22.30 – Despite having a criminal conviction against his name a few days before the re-election, Ted Stevens only lost his place on the Senate by a few votes.
28.15 – The Bar associations are less than useless in these situations because they just give the same response.
32.30 – Judge Sullivan is turning around the Freedom of Information Act lawsuit against the IRS and doing his best to achieve a just result.
34.40 – There are too many aspects of the IRS case that just seem conveniently timed for it to be believable.
35.10 – Many of Sidney’s articles about these issues can be found at www.Observer.com
37.10 – If the IRS is being used to target political opponents, who gave that order?
39.15 – Information about the book and how to purchase it can be found at www.LicensedtoLie.com. Tweet Sidney using the handle @SidneyPowell1 and be sure to ‘like’ Licensed to Lie on Facebook.

 

Tweetables
What does it say when an agreement has to be signed, promising to only agree with the government’s view of a case?
Do we really live in a system where you do something wrong and get promoted?
If production of actual evidence was compulsory, a lot of court cases would have very different outcomes.
A single juror is the last bastion of democracy because they alone can stop an unjust criminal conviction.

 

Transcript

Introduction:
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:
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 blog post. We have a lot of resources there for you and you can find that at www.AmericanMonetaryAssociation.org, or the website for the Foundation, which is www.JasonHartmanFoundation.org. Thanks so much for listening and please visit our website and enjoy our extensive blog and other resources there.

Jason:
It’s my pleasure to welcome Sidney Powell to the show; former Department of Justice attorney and author of Licensed to Lie: Exposing Corruption in the Department of Justice. What could be more timely than that? Sidney, welcome, how are you?

Sidney:
Thank you so much, I’m fine thank you.

Jason:
It’s good to have you. Just give our listeners a sense of geography: where are you located?

Sidney:
At the moment I’m in Nashville, North Carolina.

Jason:
Ah, a beautiful place, I’ve been there. Tell us how you came to write the book. I mean you broke some amazing news; tell us about that too.

Sidney:
Yes. I wrote the book not because I wanted to, but because I felt like I had to. I call it the book I literally prayed I would not have to write. It tells the true story of prosecutorial misconduct – prosecutors’ deliberate wrongdoing at the highest and worst levels, and some of the most major, high-profile litigation of the last decade, including the Arthur Andersen case, the Merrill Lynch prosecution and the United States prosecution of United States senator Ted Stevens thereby unseating the longest serving Republican in the United States senate, changing the balance of power in the Senate and enabling the enactment of Obamacare, among other things.

Jason:
This is just unbelievable. I’m glad you wrote the book because people need to know. They need to know this for sure.

Sidney:
Yes, they do need to know, and I wrote it like a legal thriller so it’s not too full of legalese; everyone should be able to understand it. They say it reads like a John Grisham novel.

Jason:
Well I hope they make a movie out of it, or at least a documentary. A movie would be best!

Sidney:
It would make a good movie.

Jason:
First of all, you outlined those cases – tell us why. I always ask what would be the motivation for the prosecutors to engage in these dirty deeds? Why would they do it? In each of these cases, what do you think their motives were?

Sidney:
It’s hard for me to understand. I can’t really ascribe a particular motive to them because it’s so wrong, it’s off my radar screen. I do know that they punched their tickets to very high powered jobs and very lucrative senior positions in major international law firms, and I’m talking about drawing 7-8 figure incomes from that. One became Chief White House Council, one became General Council Deputy Director of the FBI, one became the Acting Attorney General for the Criminal Division of the Department of Justice and then micromanaged Stevens’ prosecution, and that wound up being so corrupt that Judge Sullivan dismissed the indictment and then they appointed a special prosecutor to investigate the Department of Justice itself and the ironically named Public Integrity Section Lawyers who had corrupted that prosecution under the direction of Mr Matthew Friedrich. Another is now Head of the Criminal Division of the Department of Justice – Leslie Caldwell, she’s the prosecutor who led the government’s indictment of Arthur Anderson, only to be reversed by the United States Supreme Court years later after 85,000 jobs were destroyed. The Supreme Court reduced it to nothing, stating it was shocking how little criminal culpability the jury instructions required, and the indictment did not allege criminal conduct.

Jason:
Let’s maybe go chronologically here and we’ll work our way up to Lois Lerner, who in my opinion, should be sitting in jail cooling her heels for contempt, or sanctioned at the very least. What’s the oldest case? Is it the Enron one, of the ones you mentioned?

Sidney:
Yes. The Enron prosecutions were the oldest ones – the government appointed the Enron taskforce. I think a member of the Department of Justice handpicked these prosecutors.

Jason:
Just give the high-level view of that case. It involved Enron, Arthur Andersen…

Sidney:
Arthur Andersen, Merrill Lynch, there were multiple cases and of course there was justifiable public outrage over the destruction of Enron, and it was a complicated scenario. There was outrage across the country because so many people lost so much money and that led to the creation of the Department of Justice taskforce that was then untethered from the Department because of Bush’s connection with Ken Lay who was Chair of Enron. This group of handpicked prosecutors got together and decided to make up crimes out of things that weren’t, they cast a net that was far too broad. Of course, there were some people at Enron who had committed crimes, but many who were indicted had not. They went about it in such a way that they really shut down any opportunity for justice to prevail, given the public outrage that fuels a feeding frenzy for scalps in the first place, and then they named over a hundred people as unindicted co-conspirators so that anyone in that realm at all had to lawyer up. They couldn’t talk to anybody else.

Jason:
“Unindicted co-conspirators”. So that means…what does that mean? Explain the legal implications of that. So in other words the Department of Justice labelled – what did you say, 100 people?

Sidney:
Over a hundred people.

Jason:
Over a hundred people. So these are people that probably worked for Merrill Lynch, Enron and Arthur Andersen, right?

Sidney:
Correct.

Jason:
Okay, and so they labelled them as unindicted co-conspirators, so they didn’t go after them.

Sidney:
The people did not know whether they were coming after them or not. They knew that there was a pall cast over them and that immediately put extreme stress on them and required them to get lawyers. It required them to invoke their rights against their system and add protections if they were called to testify because the prosecutors were also threatening to indict for perjury or obstruction of justice – anyone who testified at any time about any facts that were contrary to the taskforce’s view of the facts.

Jason:
Wow, that’s just amazing. So what effect does that have on the case? Like the fact that these people lawyer up, they take the fifth amendment – what does that do? What is the outcome that creates?

Sidney:
It made it virtually impossible to mount a defence. For example, the four Merrill Lynch executives who were literally just doing their jobs couldn’t even talk to their own in-house council about what had happened in the transaction. It took us six years to find out the truth about what she had told the Enron grand jury before the indictment, and it turned out that she had testified before the grand jury.

Jason:
Hang on a second – the transaction, what is that?

Sidney:
Yeah, the transaction was called the Enron or Nigerian Barge Transaction – in which Merrill Lynch invested $7 million. It was a power project that Enron was conducting for the country of Nigeria at the request of our state department.

Jason:
And I’ve got ask you something before you dive into more detail, and I appreciate the detail; it’s really quite fascinating. I have noticed over the years that Merrill Lynch, as well as Goldman Sachs, seems to be involved in so many criminal activities. Actually, I don’t know if they’re technically criminal per se, but I’ll call them criminal for layman terms. They’re just wrong. Are you saying Merrill Lynch and Enron weren’t guilty of anything, that they didn’t do anything wrong? Or Arthur Andersen with the paper shredders and so forth? That’s my belief, from the public point of view – it seemed like Arthur Andersen, the accounting firm that was in business for around 150 years before that. My cousin used to work for Arthur Andersen. It seemed like they destroyed documents, it seems like Enron was pulling scams with their special purpose vehicles and such. I don’t know exactly what Merrill Lynch was doing in there but they always seem to be involved in something bad. How do you like that for throwing the baby out with the bathwater? Hey listen, I’m not a lawyer, I don’t have to live up to any big standards here. I’m not a prosecutor. It’s just my impression, anecdotally. I’ve not studied this in detail.

Sidney:
That was my impression too, frankly, until I got into the cases, and the book explains that. The reason that’s what everybody thinks is because that’s all anybody heard.

Jason:
Right, right. Of course, yeah, that was in the media and whatever the media sells is what everybody ends up believing.

Sidney:
And that’s all the government was sharing because they were hiding the evidence that showed people were innocent. For example, in the Merrill Lynch case, they have actually yellow highlighted the evidence from witnesses who had been direct participants in the alleged transaction that they said was criminal. They yellow highlighted the exculpatory statements that were favorable to the defence and they hid them for six years while four Merrill Lynch executives went to prison on an indictment that did not even state a criminal offence.

Jason:
Wow. Now I’m actually starting to feel some sympathy for Merrill Lynch. Did Enron do anything wrong, just broadly?

Sidney:
There were any number of things done wrong at Enron. Some were bad business judgments, some were overly aggressive actions – their procedures for accounting were way overly aggressive and there were people at Enron who actually stole money. Two members in particular made sweet plea agreements with the government; Ben Glisan actually plead guilty without a deal but then got one later. The young Treasurer of Enron, to soften him up when he plead guilty and refused to cooperate, they put him straight into solitary confinement for a few weeks. They really played hardball with these business people. One of our young Merrill Lynch executives was sent to a maximum security prison with the worst of the worst, and we got him completely acquitted on appeal.

Jason:
How long did he spend in prison?

Sidney:
Eight months.

Jason:
Wow, that’s amazing.

Sidney:
8 months away from his four-year old and two-year old in a maximum security federal transfer facility.

Jason:
Since I asked you the very general question of ‘Did Enron do anything wrong?’, did Merrill Lynch do anything wrong at all?

Sidney:
Yes it did. It was a civil issue only, not a criminal one. Merrill made another tactic of the task-force – after they destroyed Arthur Anderson merely by indicting it, they turned their sights on Merrill Lynch. Merrill Lynch agreed to a very onerous non-prosecution agreement that required, among other things, that any Merrill employee that spoke about the transaction agree only with the government’s view of the case. In other words, they couldn’t say anything contrary to the taskforce’s view of the case, or Merrill Lynch could be indicted solely within the discretion of the taskforce. And an indictment of Merrill Lynch would have destroyed it.

Jason:
How about Arthur Andersen?

Sidney:
Everybody thinks Arthur Andersen was convicted of shredding documents but it was actually charged with witness tampering. It had no legal obligation to keep any documents at the time. The documents were shredded and ask you know, accountants, lawyers, doctors are not supposed to have paper flying around. There are things we’re supposed to protect and shred. There was no subpoena at the time and so after Andersen’s 85,000 jobs were destroyed the Supreme Court reversed it completely to nothing. It was a unanimous Supreme Court reversal based on the flawed indictment and the fact that the prosecutors and the district judge in Houston took any element of criminal intent out of the jury instructions.

Jason:
Wow, that’s amazing. It’s really a different story. I call Wall Street the modern version of organized crime somewhat frequently, and I still think that, but maybe it is time for another look at this case and some of these other cases because there’s a really interesting documentary that re-framed it – and I had the director of this documentary on my show. It’s called ‘Hot Coffee’ and it really re-framed this Stella McDonald coffee spill case. McDonald’s just completely vilified this poor old lady. It seemed like this ridiculous jury verdict and immediately I and everyone else had the knee-jerk reaction of ‘Oh, we need a reform, this is absurd that these companies can be liable for this kind of stuff blah blah blah’ but there are two sides to that story too, so maybe there are two sides to this one as well and I’m open to hearing it. I don’t want to spend all our time on this one, though, because there are a few others and we’ve really got to get to Lois Lerner as well. Any other comments about Enron, Arthur Andersen, Merrill Lynch; that case, if you would.

Sidney:
One of the things I’m encouraging people to do is to wait to form judgments until we know more of the facts, because it is so easy to jump to a conclusion with respect to anything. I was guilty of it myself in this, and the book reveals that as it goes along. There was so much out there that the government hid and then the prosecutors that hid it rose to extremely powerful positions and have basically been running our government for the last six years, and nothing has been done to them. They’ve not only not been punished or called to account for their wrongdoing in anyway; they were all promoted.

Jason:
Of course, that’s what happens in our system. You do something wrong, you get promoted.

Sidney:
Apparently.

Jason:
Next case, if you will.

Sidney:
Andersen was the first conviction above a taskforce, and then the four Merrill Lynch defendants. The Merrill Lynch defendants from the barge case were sent to prison by the judge, who literally said ‘I realize you were just doing your jobs’, but he refused to dismiss the indictment, even though it was something that had never been charged as a criminal offence in the history of our country. It was a completely unprecedented application of the statutes to facts like were in this case. The four Merrill Lynch executives went to prison while the prosecutors had actually yellow highlighted and hidden the evidence that showed they were innocent.

Jason:
Unbelievable. That’s just insane. This is so terrifyingly scary that you could be – and this could happen to any of us, okay. You may think you live this pristine life, and believe me, there are so many laws, everybody’s breaking laws nowadays. Even if you don’t speed in your car, you’re breaking a law, trust me. The government has a law that you are breaking. Some – I’ll say ‘ambitious’, in a snarky way – district attorney, or someone at the DoJ, they could just have it out for you, or they could be trying to win re-election, or they could be trying to further their career in some way, and they’ll just go and ruin your life and maybe take away your freedom or even your life.

Sidney:
Yes. The fifth circuit court of appeals reversed the conviction of twelve out of fourteen counts of the Merrill Lynch convictions because the indictment was fatally flawed and defendants’ conduct was not criminal, but we couldn’t even get them bail pending appeal, so they served in prison while their appeals were pending, only to be told by the court that there was no criminal offence charged. That shattered all of their lives, but the government was undeterred by the reversal. They decided they would just write out the portions of the indictment that the fifth circuit had specifically criticized, so they wrote those out and were going to drag the defendants through a second trial. These men – my client, for example, was in litigation for almost ten years; the entire teenage years of both his children, and going back to your comment about people leading pristine lives: Dan Bailey was one of the Merrill Lynch executives indicted and sent to prison. The judge, as he sentenced him, told him he’d never had such a fine person stand before him for sentencing.

Jason:
And the judge had to do it though, right? Because that’s the law.

Sidney:
Well no, he didn’t have to do it. He should have dismissed the indictment because we made the same arguments to him that the Court of Appeals reversed on – the indictment did not state a crime.

Jason:
But sometimes the judge is tied, right? They have to do things even if the judge doesn’t agree with it, just because of the way the law is, right?

Sidney:
No.

Jason:
No, okay.

Sidney:
If he had applied the law correctly, he would have dismissed the indictment and there would never have been a trial in the first place.

Jason:
Why would he even say that then? Why would he say that he’d never had such a fine person there? It sounds like he didn’t want to convict him – or sentence him, I mean.

Sidney:
He didn’t want to have to send him to prison, but when he refused to dismiss the indictment and allowed it to go to trial, that was the consequence.

Jason:
Wow, amazing.

Sidney:
He didn’t do his job in any way, shape or form. The trail was a total farce and I’ve never seen a trial so infected with errors as the Merrill Lynch trial was from the indictment through the jury instructions.

Jason:
It’s amazing though. I mean, all these bigwigs at Merrill Lynch must have had the world’s best attorneys defending them, right?

Sidney:
They did. It didn’t matter. When you have a judge that’s determined to ensure your conviction and prosecutors who hide the evidence that show you’re innocent, anybody can be sent to prison. Noone in this country is safe from this kind of misconduct by the government, and the only person who can stand between the prosecutors and the jail cell is a good federal judge. If you have one that just sits there and watches the parade go by, it’s not going to do the right thing.

Jason:
So one of the things you talk about in your book is the dangerous fuel of public outrage. This is kind of where the media turns us all into lynch mobs, right? We just want to bring people to justice so bad that we become blinded, and the courts become blinded. How much pressure do these judges and prosecutors feel to just nail somebody? Maybe it’s not even the right person.

Sidney:
The prosecutors were selected for the purpose of doing that. That was their whole mission – to see how many scalps they could rack up and see what kind of crimes they could create, basically, on behalf of the Enron taskforce. They went in with the mindset that’s totally contrary to the way I was raised in the Department of Justice. There’s an old Supreme Court case that talks about how a prosecutor is supposed to seek justice, not convictions, and while he is at liberty to strike bare blows, he cannot strike foul ones. They violated every aspect of that mantra.

Jason:
Before we get to Lois Lerner, can we do anything about this?

Sidney:
Yeah, there are a number of things that can be done. Several years ago, after the Ted Stevens conviction was thrown out, Judge Sullivan named a special prosecutor to investigate the Department of Justice. He came out with a mammoth report (about 500 pages long) – a lot of the evidence he found was systematic and pervasive intentional misconduct within the Department of Justice. There’s a non-profit organization called POGO (Project on Government Oversight) www.pogo.org, and it has also, by virtue of the Freedom of Information Act, identified over 400 instances of prosecutorial misconduct in the last decade, that has been intentional or reckless. Eric Holder refuses to even release the names of the prosecutors who engaged in misconduct that the Department itself has identified as intentional or reckless.

Jason:
Okay, tell us a little bit about the Ted Stevens story. Give us the background on that.

Sidney:
Senator Stevens was indicted by one of the former Enron taskforce prosecutors, Matthew Friedrich, at his insistence when he became Acting Attorney General in charge of the Criminal Division of the Department. In that case, they also hid evidence that seriously impeached the government’s main witness, with whom they had made a very sweet deal and basically controlled anything and everything he would want to say or they would need him to say. Among the evidence they hid was the fact that he had engaged in sex trafficking with a minor and engaged in subornation of perjury – rather crucial things that should have been disclosed to the defence in that case. They had also made up a story to explain a note that Senator Stevens had written, on which his entire defence was based. The Senator was convicted a few days before the election for his Senate seat, that was one of the most hotly contested races in the country at the time. He lost the election by only a few votes, despite the criminal conviction, because Ted Stevens was loved in Alaska. The airport was even named for him, and everybody loved Ted Stevens. He was a World War Two hero, he was former US Attorney, he had just done all kinds of good things for the state of Alaska. So he only lost by a few votes, but that changes the balance of power in the United States Senate. An unusual thing happened – a young FBI who was assigned to the case broke ranks from his fellow agents and blew the whistle on prosecutorial misconduct that he had witness. That happened in December after the conviction in late October-early November. There had already been any number of instances where the defendants and the judge had caught the government in one lie after the other, having failed to disclose this or that. They sent a witness back to Alaska to keep him off the witness stand – they found out later it was because he had not done well in his mock cross-examination. They claimed it was because he wasn’t feeling well. He was under the weather, but the defence had also subpoenaed him and they sent him back without letting the defence know. So a number of things had been discovered throughout the trial. The FBI agent blowing the whistle just blew it wide open and Judge Sullivan and the District of Columbia was absolutely livid. The defence had been filing motion after motion, so that led to a new set of prosecutors being appointed. Judge Sullivan held the original prosecutors in contempt of court. That triggered a requirement within the Justice Department that new prosecutors be assigned to the case. It only took those new prosecutors a couple of weeks to find the evidence that the original team had hidden, and that led to Eric Holder rushing in as the newly appointed Attorney General. I think he’d only been in office 3-4 weeks at the time. He rushed in to dismiss the indictment in the interest of justice, and announced that he was going to clean up the Department and send in the message throughout the Department that violations wouldn’t be tolerated. We were still in the Merrill Lynch litigation at the time and hadn’t even discovered the yellow highlighted evidence yet, but I still had a strong sense that the government was hiding things. Nothing made any sense. They’d only given us a few line summaries of the testimony of these crucial witnesses, and we knew there had to be more out there in terms of notes or the FBI reports of their transactions or their grand jury testimony or their SEC testimony. They wouldn’t give us any of that so we kept pounding for it. After Stevens’ debacle and the dismissal of that indictment, the third team of prosecutors assigned to the Merrill case were trying to retry the defendants did give us a few little things. In March of 2010, they gave us a disk and that disk, unbeknownst to them (they apparently didn’t review it before they gave it to us) contained the yellow highlighting of the evidence that directly contradicted the government’s entire case against the Merrill defendants. So they produced that only by accident and didn’t even realize they’d done it.

Jason:
Wow, that’s just unbelievable. Can these prosecutors be prosecuted for -

Sidney:
For obstruction of justice?

Jason:
Yeah, for going on these witch hunts. Does that ever happen, though? It probably can happen.

Sidney:
It can happen, and I know of one time that it happened but it is extremely rare. One of the reasons I had to write the book was because we couldn’t get the Department of Justice to do anything about this. My client still stands convicted of perjury and obstruction of justice for expressing his personal understanding of a telephone call he wasn’t on, even though Andrew Weissman, the prosecutor in the Grand Jury had told him to share his personal understanding, whether it was accurate or not. Even though, as it turns out, his personal understanding was absolutely true and had been yellow highlighted by the government by the actual participants in the call.

Jason:
Unbelievable. OKay, so prosecution is rare, if ever. It’s so rare, it’s negligible. But what about civil liability? If one of these prosecutors goes after you, you can’t sue the judge (they’re pretty much immune), but can you sue the prosecutor?

Sidney:
That is extremely difficult also. There is a little bit of precedent for that, but again, it is so rare as to be negligible and the standard’s so hard to meet as to be negligible.

Jason:
What’s the standard? Why is it so hard?

Sidney:
I don’t remember the precise wording of it, but it requires a significant level of proof and the courts are just not interpreting it with any sort of leniency at all. The Bar associations are doing nothing. Bill Hodes, one of the leading ethics experts in the country and I filed grievances against Andrew Weissman, who became General Council to the FBI, Kathryn Ruemmler who became Chief White House Counsellor and Matthew Friedrich who became the person who micro-managed the Stevens prosecution. We filed grievances against those with their respective Bar associations because after we found the yellow highlighting, the Fifth Circuit did hold that the prosecutors had plainly suppressed evidence favorable to the defence. There’s an ethical rule 3.8 which is a special rule governing prosecutors that says that it’s a serious ethical violation. Well, the Department of Justice defended Weissman and they said, like the Fifth Circuit, that it will refuse to reverse the convictions of my client on the perjury and obstruction charges that were ridiculous. They’ve said there will be no new trial or anything. In fact, we couldn’t even get a hearing on the motion for a new trial because of the yellow highlighting.

Jason:
You were talking about what we can do about it. Did you cover all those things? You mentioned POGO. Maybe just quickly mention one or two more, and then I want to talk about Lois Lerner.

Sidney:
Yes, well there was legislation proposed in Congress called the ‘Fairness in Disclosure of Evidence Act’, and there’s going to be a new act introduced called the ‘Prosecutorial Integrity Act’ that’s designed to put some teeth in the rules that require prosecutors to disclose evidence favorable to the defence and to set some timelines for that. The Fairness in Disclosure of Evidence Act was widely supported from the ACLU through the National Association of Criminal Defence Lawyers to the Chamber of Commerce. Everybody supported it. It died in Committee because it was deposed by the (now ironically named) Department of Justice. So now the Prosecutorial Integrity Act will be introduced and we will try again to get that legislation passed, and hopefully there will be more impetus to pass it, particularly with the book out and people reading it and listening to radio shows like this. Also, judges can enter Brady Compliance Orders – district court judges in the state and federal system could do that tomorrow and require prosecutors to produce the actual evidence. Summaries should rarely ever be allowed. They shouldn’t have been allowed in our case. If we had gotten the actual documents, this wouldn’t have happened.

Jason:
That could be a good step in the right direction.

Sidney:
Yeah, that’s an immediate step in the right direction, and I also want to encourage people not to shirk their jury duty. Everybody thinks it’s such a pain, and it does take time out of your life, but a single juror is the last bastion of democracy because a single juror can stop an unjust criminal conviction.

Jason:
That’s a great saying, by the way. A single juror – just you, one person – is the last bastion of democracy. It reminds me of the great quote by Ayn Rand when she’s talking about group rights and the concept of if a group has any rights. Nowadays we have all these groups and they want rights, but the smallest minority on earth is the individual – there’s no such thing as group rights, only individual rights.

Sidney:
Yeah, and you know John Galt comes out in theaters tomorrow.

Jason:
Oh, the third one is already out.

Sidney:
Part three comes out tomorrow.

Jason:
That’s great, I have a couple of friends that were involved in the production of that movie; I’m sure it’ll be awesome. Let’s talk about the IRS scandal really quickly. We’ve definitely taken a deep dive into this stuff, but this is just disgusting what is going on with Lois Lerner and her Blackberry, and you broke that story so tell us more about it.

Sidney:
Yeah, Judge Emmet Sullivan, one of the heroes in the book Licensed to Lie is the judge who is presiding over the judicial Freedom of Information Act lawsuit against the IRS, pursuant to which they’ve requested the same email that Congress has been trying to get. Judge Sullivan was the one who appointed the special prosecutor in the Stevens case to investigate the Department of Justice, so he is not going to sit and watch the parade go by. He is a judge of great integrity and courage and he is very interested in doing what’s right and fair. When the first points were filed in response to his order, he had also appointed a special magistrate to assist the parties in finding the emails from other sources – that magistrate judge is an expert in electronic discovery. They are working on it. Judge Sullivan wasn’t satisfied with the first ones that the IRS provided in response to his questions about where the emails were and what happened to this computer and first it was one, then it was 7, then it was almost 20. Just last week they came out with another 5 that had crashed. Basically the answer is that if Congress wants the emails, that person’s computer crashed.

Jason:
Unbelievable. If I did that in the case, I would get fined and sanctioned. Congress can’t even get the emails – that’s amazing!

Sidney:
It is extraordinary.

Jason:
How do these people get away with this crap? It’s disgusting.

Sidney:
I don’t think they’re going to get away with it much longer with Judge Sullivan on it.

Jason:
I hope not.

Sidney:
After the first declarations were filed and he wasn’t satisfied with those answers, he requested second declarations, and he specifically asked about a Blackberry because they’d said nothing about it. When the government filed the second set of declarations, you had to read them very carefully and put the pieces together, but they disclosed that Lois Lerner actually had two Blackberry phones. They described one by serial number and the other by date. So I sat down with the two declarations, ran a timeline, kept track of the numbers and realized that they were admitting that they had destroyed Lois Lerner’s Blackberry that would have had the emails on it from the time that Congress was requesting. She turned it in for destruction and got a new one on Valentine’s Day 2012, which was when Congress had really focused on her. They’d already talked to her and the IRS destroyed it in June of 2012. Her computer had crashed in, I think, April 2011.

Jason:
Her computer had conveniently and allegedly crashed.

Sidney:
Right, and that was just a few days after she got the request from Congress for the emails.

Jason:
Here’s what’s funny about this whole case. Certainly, you would expect that the IRS backs up their computers, for God’s sake, right?

Sidney:
Right. They also terminated their long-standing contract for document back-up.

Jason:
How convenient. All of this coalescing is just such a convenient series of events here.

Sidney:
Yes, and I’ve got a number of articles on this topic as it developed at www.Observer.com. A lot of those have gone viral and been widely reported and used by other media as well.

Jason:
Here’s a snarky idea as to where to get Lois Lerner’s data and her emails from. Why don’t we just go to the NSA? Don’t they have everything?

Sidney:
Right! Several people have suggested that!

Jason:
Oh, I thought that was an original idea. Darn it!

Sidney:
Sorry, no. Several people have suggested that if you read the comments to the articles on www.Observer.com. You’ll see lots of comments to that effect.

Jason:
Darn, I can’t be original as hard as I try.

Sidney:
The government did admit to Judicial Watch a week or two ago that there is a massive government back-up system, but they claim it would be too hard to go and find the emails there, so that’s why they sent their warrant.

Jason:
Unbelievable.

Sidney:
They just lie because it’s difficult and then obstruct justice because it’s too hard to go and find them.

Jason:
Sure, of course. Okay, so what else do we need to know about the IRS? Basically just give the listeners the overall view. I’m sorry we didn’t do that first. The case is about the IRS targeting or not approving tax exempt status of like tea party groups, right?

Sidney:
Yes, the use of IRS for political purposes to harass conservative groups, especially before Obama’s re-election in 2012, and there’s the Inspector General for Treasury who’s the watchdog over the IRS even confirmed in his report that improper political targeting had occurred, and Lois Lerner’s activities were totally inappropriate.

Jason:
We all saw the testimony of some people in these groups that couldn’t get their political group approved or their political action committee, or their non-profit group. This is unbelievable that the Obama administration is using the IRS as a weapon to target political opponents.

Sidney:
It’s an outrage.

Jason:
Outrage is an understatement. That is disgusting. Did that come from Obama himself? It must have, or he must have known about it.

Sidney:
It definitely has to go into the White House, or their wouldn’t be such an extraordinary effort to refrain from producing the paper and all these ridiculous mysterious computer crashes that defy logic, reason or reality. These are basically intellectually insulting to even 10 or 15 year olds in this country who know that computer don’t crash like that.

Jason:
Even if they do crash, the data can still be recovered most of the time. The only thing that really makes it so that you can’t recover the data – from what I understand – is a fire.

Sidney:
Or drilling a hole in the hard drive.

Jason:
Yeah, a complete physical destruction of it.

Sidney:
Yeah, in fact, Lois Lerner’s hard drive was just scratched, according to the initial report, and supposedly one person had testified to Congress that he suggested it be sent to an outside vendor to recover the emails. The IRS didn’t do that and instead, they completely physically shredded it. They did the same with the Blackberry: they wiped it and then they physically destroyed it.

Jason:
Unbelievable. This is just disgusting.

Sidney:
If any of us did that, we’d be under the jail for not being able to produce your material for an audit because your computer crashed and for shredding your computer.

Jason:
And conveniently they didn’t lose any audit or taxpayer files. They can still go after the taxpayers!

Sidney:
Right. It’s just amazing that only the email traffic between the folks in the White House and around the political targeting of the conservative groups seems to have been lost. Meanwhile, there was an IRS person who made over 165 visits to the White House in person, during the same time frame.

Jason:
Unbelievable. Okay, just wrap this up for us. We’ve been going a little long here. Any closing comments on anything? Give out your website and tell people where they can find the book.

Sidney:
Yes, read Licensed to Lie: Exposing Corruption in the Department of Justice. The website is www.LicensedtoLie.com. The book is definitely available on Amazon, as well as from various bookstores. I tweet with the handle @SidneyPowell1 and like Licensed to Lie on Facebook. Tell your friends! It’s on Kindle and Nook, so it’s available in every form.

Jason:
I really hope that they make a movie out of your book because number one, I think it’ll be fascinating, but number two, that’s the only way the mainstream culture will ever know any of this stuff.

Sidney:
That’s true. It would reach a much wider audience if it goes to that form.

Jason:
Very very important topic and very interesting. Sidney Powell, thank you so much for joining us.

Sidney:
Thank you very much. Oh, and remind people as well to go to www.Observer.com to read the assorted articles, including one about the White House and those emails.

Jason:
Good stuff. Sidney Powell, thank you.

Sidney:
Thank you.

Outro:
The American Monetary Association is a non-profit venture, funded by the Jason Hartman Foundation, which is dedicated to educating people about the practical effects of monetary policy and government actions in 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 media@hartmanmedia.com. 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.

 

 

 

A Cash Free Society? Sweden Leads the Way

A Cahs Fre Society? Sweden Leads The WayHard metal in the hand or virtual numbers on a card, money is what people agree that it is. And now, as Sweden moves quietly toward a cash-free society, the very nature of money – and what it means – could be forever changed.

Sweden has long been in the vanguard of cultural shifts. Its free and easy attitudes toward sex, marriage and marijuana are almost stereotypical. Now, according to a new article from Business Insider, Sweden may be on the leading edge of another revolution – making the shift from hard money to electronic transactions.

In 2013, four out of five monetary transactions in Sweden were conducted electronically, either by electronic transfers or swipes of credit, debit and other kinds of cards. That preference for electronic transactions has led to some unlooked-for consequences. ATMs and other cash-dispensing terminals are becoming few and far between. And armed robberies are rare, since there’s no cash to steal. Bank robberies in particular are at a 30-year low.

In Sweden, everybody accepts cards, prompting one academic to claim that in 20 or 30 years, the whole country could be virtually cashless. That’s a shift caused by cultural preference, not government decree. Anyone in Sweden is free to carry cash and use it – but the trick is finding places that do cash transactions.

Sweden’s quiet slide into cashlessness has people worried: Swedish natives, who claim that cash is a basic human right; Christian conservatives who see a cash free world as a sign of the end times, and financial experts who raise concerns about whether a completely cash free society could be viable – and what that means for other kinds of monetary experiments like the Bitcoin.

Throughout human history, money has had many identities. From the goats handed over in exchange for a daughter’s hand to the gold coins minted by a royal bank, currency has evolved from simple barter to an complex structure represented by symbols on paper and metal. Physical money was always easy to carry and largely anonymous.

But the rise of the credit card changed all that. You could use a card to hold all your money – and even money you didn’t have. Transactions were quick and easy. Ecommerce took the process a step further, with one click online shopping and more. And as more and more businesses and institutions began to accept online payments or payments with cards, cash started to look a little inconvenient and maybe old fashioned.

What’s more, cash costs money to produce, store and manage – costs that are largely irrelevant to the digital world. In Sweden, for example, cash handling costs have plummeted in the last five years, since e-transactions gained such popularity.

But some financial expert worry that over-reliance on electronic money in all its forms could have serious consequences. And civil libertarians worry about the toll taken on privacy.

Going cash free in Sweden – or anywhere else, for that matter – depends on having access to things like computers, electronic banking and credit. For those who don’t have those things, cash is the only option. That locks these individuals out of many services and transactions that depend on the electronic movement of money.

For those who can function without cash, there are other problems. As the world has seen again and again, virtually any database can be hacked, leaving users’ personal and financial information vulnerable to identity theft by people halfway around the globe. And if a major event such as a natural disaster or terrorist attack takes the nation’s power grid offline, the economy of such a cash free country could be plunged into chaos.

In a global world, cashless societies face challenges too. People traveling outside the country would need cash – and so would those conducting business in places that rely heavily on hard money.

And then there’s the privacy issue. Cash has always been the currency of choice when transactions need to be private – for reasons both innocent and criminal. Just about any electronic transaction can be traced back to the parties involved.

Those concerns fueled the development of the Bitcoin – a digital hybrid that promised the convenience of cashless transactions with the anonymity of cash. All it takes is for two parties to agree to conduct a transaction in Bitcoin – a nod to the earliest systems of money.

In most of the world, though, cash is still king. And there’s no law in Sweden or I other countries against using it. Sweden’s tilt toward cashlessness reflects a desire for convenience and economy, not a government mandate. But the trend reveals a new social experiment that pushes the boundaries a little further – and forever changes the way we think about money and the way it works. (Top image:Flickr/DanJ)

Source:
Farquhar, Peter. “Sweden is Going to Be the First Country in the World Completely Free of Cash.” Business Insider Australia. businessinsider.com 13 Oct 2014

Read more from The American Monetary Association:

US Dollar Rides High in World Markets

Do Borrowers Need Banks?

The American Monetary Association Team

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US Dollar Rides High in World Markets

The dollar Rises in World MarketsAfter the roller coaster ride of recent recession years, the US dollar is on top again – at least for now. And its strong showing against other world currencies may be due to the Federal Reserve’s much-maligned Quantitative Easing plan.

According to a recent Business Insider article on the performance of the dollar and other currencies, in the third quarter of 2014 the venerable US greenback hit highs not seen since 2010.

That was the period immediately after the great economic collapse of 2007-2009, when the housing market crashed and the nation was plunged into recession. In an attempt to bolster the sagging economy, the Federal Reserve set in motion its much publicized (and much maligned) Quantitative Easing plan, version 3.

The plan involved the massive buyup of mortgage backed securities, which the Fed hoped would keep interest rates low, stimulate the buying of housing and other goods, and get the economy moving once more.

QE3, the most ambitions of the Quantitative Easing put into place after the crash, was met with skepticism by many in the financial community, including officials of local branches of the Fed itself. The Fed’s buyup of over $80 billion in securities every month was keeping interest rates artificially low for an indefinite time, and financial experts worried that when the Fed decided to scale the program back, those rates would rebound to higher levels and trigger another crash as blindsided consumers found themselves unable to borrow and buy again.

But thanks to a brighter employment picture and a stronger housing market, the Fed began in early 2014 to take baby steps – to the tune of $10 million a month – to scale back the stimulus, with the option to kick it into high gear again if conditions changed.

Several months into the “taper down,” though, things haven’t worsened. Interest rates have inched upward, but not by much. And the dollar, as we’ve seen, has surged to its highest level in years, effectively silencing critics of the Fed’s aggressive move.

News about the performance of the dollar goes along with new data released by the US Department of Commerce, indicting an uptick in the Departments estimate of growth domestic product growth – its fastest increase in over 2 years.

That growth makes the US economy the “brightest spot” in today’s world markets, according the Business Insider. And it’s one reason the dollar continues to post gains against other leading currencies, especially in Asian markets.

The dollar continues to attract investors partly because the Fed’s final decision about the fate of the stimulus is still hanging, dependent on a variety of economic indicators. Because the future of QE3 still hasn’t been determined, international investors may be steering clear of US stocks and bonds, preferring to stick with the tried and true dollar.

The behavior of the dollar, and its attractiveness in markets around the world even in the toughest of times, confirms US domination of the world financial system – even as countries such as China surge to the top of the lists of the world’s largest economies.

US Treasury bonds are the backbone of the world’s currency markets, and its banks contribute to the setting of LIBOR rates – international interest rates – worldwide. And the world watches the moves of the Federal Reserve and American megabanks for clues to the behavior of those rates.

The Federal Reserve isn’t alone on the world stage in its efforts to manipulate economies. Other countries, faced with rising unemployment and a stagnant economy, have put into place easing measures of their own – but none so aggressively as the Fed. That, say some financial experts, may be keeping recovery slow and economies relatively weak.

The dollar isn’t without challengers, though. Some fear that China, now the world’s largest economy, might take aim at the dollar and the system it represents in order to claim that status as the go-to financial system for the world. And global conditions are liable to change rapidly, with emerging markets and other parts of the world claming a piece of the pie.

But backed by its longstanding – and very stable – government banking system and an enduing reputation for reliability around the world, the dollar continues to stay the course. And as the Federal Reserve keeps a watchful eye on the progress of the stimulus, the US dollar may still the currency to watch – and to trust. (Top Image:Flickr/squeakymarmot)

Source:
Sano, Hideyuki. “Dollar Hits Four Year High.” Business Insider via Reuters. businessinsider.com. 28 Sept. 2014.

Read more from The American Monetary Association:

Do Borrowers Need Banks?

International Conflict Hits Americans In the Wallet

The American Monetary Association Team

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AMA 92 – Editor of Stray Reflections – Jawad Mian

Today’s American Monetary Association program features the founder and editor of Stray Reflections, Jawad Mian, as a guest. He and host, Jason Hartman discuss the current and potential state of Dubai and the rest of the United Arab Emirates before moving on to consider some of the biggest consumer investment issues facing today’s society and looking at the future of bitcoin.

 

Key Takeaways

05.00 – A lot of the developments and changes happening to Dubai are to provide the desired lifestyle for the growing expatriate community there.
08.00 – Each of the Emirates in the UAE has different societal structures which lead to a different overall feeling of the country.
15.00 – Tourism remains one of the largest and most profitable industries in the Middle East.
17.20 – Transportation and particularly transportation of goods or consumer items is one of the biggest draws in oil reserves.
18.30 – In some ways, bit-coin seems attractive as an alternative currency, but the FBI and the IRS’s insistence that it is taxable property definitely alters some people’s view of it.
22.00 – The volatility of bitcoin as a prospective currency makes it particularly unattractive to merchants.
25.30 – The alleged main aim of bitcoin is to have an economy free from the government, but in the event of any incidents occurring, the only way they could get out from it is with government assistance.
27.10 – For more information about investing strategies and themes, head to www.stray-reflections.com

 

Tweetables
With an expected 10 million visitors to Dubai every year, the tourism sector provides huge opportunities for business.
As gas and oil prices are constantly increasing, consumers are becoming more prepared to tolerate and accept these.
Bitcoin is a huge technological advancement, but ultimately it won’t bring the monetary revolution that people are expecting.

 

Transcription

Introduction:
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:
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 blog post. We have a lot of resources there for you and you can find that at www.AmericanMonetaryAssociation.org, or the website for the Foundation, which is www.JasonHartmanFoundation.org. Thanks so much for listening and please visit our website and enjoy our extensive blog and other resources there.
It’s my pleasure to welcome Jawad Mian to the show, he is the founder and editor of Stray Reflections, a monthly investment newsletter, and he’s coming to us from Dubai today – amazing place that it is; I can’t wait to hear more about it. We’re going to talk about that, we’ll talk about investing, we’ll talk a little bit about bit-coin and some other stuff that may come up. Jawad, welcome, how are you?

Jawad:
I’m great, Jason, thanks for having me on your show.

Jason:
Yeah, it’s good to have you. First of all, what is the temperature in Dubai today?

Jawad:
I mean the summer is just getting started here, and it’s about 35 degrees Celsius, so pretty humid and sunny in the daytime. Evening is a little bit better, but still pretty hot.

Jason:
Yeah, I don’t have my converter out so I don’t know what that is in Fahrenheit off the top of my head, but it seems a little hot. Well, you can still go skiing and surfing indoors in Dubai, so you’re always taken care of there. What an amazing place. You were mentioning your background a little bit – I guess you were born in Pakistan?

Jawad:
Yes, I’m actually from Pakistan, but I was born and raised in Dubai. My family moved here in 1971 so we’ve been there from the very beginning. I’ve seen the beginning of the country, how it’s evolved and how it’s come up to being what it is today as a popular tourist destination and an investment climate. We’ve seen the whole movement.

Jason:
Why Dubai of all places to pour money into and to build some of the most incredible pieces of architecture in the world and the most amazing attractions on a scale that has just really never been known before? It’s got the tallest building in the world now. What was the impetus? A lot of people say that people in the Middle East know that oil isn’t going to last forever so they’ve got to have a new business plan. Tell me what’s behind Dubai.

Jawad:
I think to understand the rise of Dubai, you also need to understand the wider Middle East. I think the wider Middle East has been through a lot of conflict with multiple wars throughout the region and I think there needed to be a city or a haven where people could come to, and I think that’s what Dubai modeled itself against. It looked at Singapore and Switzerland, and so the leadership in Dubai consists of very enterprising individuals and families, so they wanted to leverage wherever they could based on their strengths within the region to be able to come up with a solution and an environment where everybody would be welcome. Based on that, you’ve seen them evolve from being a port city with a generally free port which was the first and largest port within the region for them to be able to attract investment too. They started building up their airlines, they started building hotels, restaurants and theme parks to try to get as many people over here as they could, with fighting going on in Iraq, Lebanon, Libya, across the Middle East. You’re seeing a lot of people moving here as well as bringing their capital here. We’re seeing the real estate market looking pretty buoyant and we’re seeing pretty high rents. It’s the one place within the Middle East where you’ve got the ability to be very flexible in the kind of lifestyle you want to lead.

Jason:
Considering that it really is a Muslim place, it’s very tolerant and open from what I hear, right?

Jawad:
Yes, absolutely. I think the leadership here realized that they want to build an open society, so while their culture is extremely important, as are their religious values, they’re also a very tolerant society. They’re trying to bring about an environment, like I said, which can attract the top business people, the top individuals and talent that want to come here and work and live. That would mean having top-notch residences, top-notch hotels, restaurants. We’ve got a pretty amazing nightlife as well with lounges and bars, and again, we’ve got fun activities for families, for their children, top quality schools. It was a matter of providing an environment for the expatriate community because if you look at the population of the UAE, there are about 9-10 million people in the country, and off that the indigenous Emirati population is probably around 20%. Around 70-80% of expatriates were working within the country and living here, so they wanted to develop an environment where they would feel comfortable and want to continue to come and live and build companies here, as well as continuing to invest, and that’s what they’ve done. They’ve been very successful – they’ve been the first movers in a lot of different initiatives, which has also cemented their leadership. It’s actually been a pretty wonderful success story.

Jason:
Has Dubai had the effect of modernizing the broader Middle East or is it just really a very different place? Is the Dubai mentality spreading?

Jawad:
Each country has its own cultural heritage, and they are internally debating how they want to progress and how they want to balance openness with preservation of their culture and how they want to continue doing business. Within the UE, for example, you have seven city states, so Dubai is the second largest. Abu Dhabi is the capital, so even within the UE you’ve got Dubai which perhaps would be labelled the most liberal, and then you’ve got some other city states that are much more conservative. It’s difficult to say that what Dubai is doing is having an influence on the wider Middle East. I think Dubai in itself is a haven, and UAE itself, actually, is a haven.

Jason:
It sounds like even within the UAE, Dubai is rather different.

Jawad:
Exactly, that’s what I said. So you’ve got different characteristics between the different Emirates. Sharjah is structured very differently, it’s much more conservative. For example, you don’t have alcohol being served in Sharjah, so within the same country you’ve got different city states holding different values depending on the kind of population that you’re willing to attract. Sharjah and Dubai are about 30 minutes away by road, so a lot of people living in Sharjah drive to Dubai. Abu Dhabi is more of a mix. So the country is diverse in that, and Dubai is perhaps the most open society within the Middle East from that perspective.

Jason:
You mentioned the real estate market earlier. I remember talking to someone back in probably 2007, so 7 years ago, and he was from Dubai. He said the real estate market there is just going to appreciate forever. It’s sort of that typical thing that you hear in the middle of any bubble – that it’s going to go on forever and it’s never going to end, and you did have a crash there with the rest of the world, didn’t you?

Jawad:
Of course. I moved here in 2007 from my time in Canada, and I was making the opposite case. I was looking at some of the excess and I was saying that we’re going to see a pretty significant decline in housing prices, and we saw peak-to-trough decline of around 60%. If you look at a real estate cycle, a typical real estate cycle from peak to trough would last 6 years, so if you look at the US housing market cycle for example, you saw it peak out in around late 2005, early 2006 and then it bottomed in around 2011.That’s typically how long it takes for the psychology to change and for the inventory to be replaced. In UAE and in Dubai, we saw a 60% decline, but instead of a 6-year cycle, it took only four years to reach the bottom, and the reason for that was the Arab Spring. Typically, we should have seen the real estate market bottoming out around now. Instead, you saw it bottom out in 2011, just as the Egyptian riots were taking place, and the Libya happened and we saw chaos in most of the surrounding countries. Because of that, a lot of the capital fled and came to Dubai because like I said, it is truly a safe haven in the wider Middle East. As well, you saw a lot of people moving here to escape the violence and escape the chaos. Because of that, again, you saw more demand coming in. So from the bottom actually, in 2011, we’ve seen a rise of about 40-50% so far, and Central Bank was seeing signs of overheating again only a month ago, with new launches of real estate projects and higher rents being charged. You’re seeing a pretty buoyant market again, and I think given the catalyst of the 2020 World Trade Expo that Dubai won, it’s difficult to see anything interrupt it all before that. I think a steady upward rise is very likely, going forward.

Jason:
Where is the income coming from? Is it all just Middle Eastern oil wealth? Everything is extremely expensive in Dubai. I just got back from Singapore two weeks ago, and it was an interesting contrast because on the same trip, I also went to Thailand, which is the opposite of that! It was kind of a relief to not pay $53 for breakfast at Marina Bay Sands. Do people have incomes there to support that? Or is it just this massive amount of oil money?

Jawad:
OKay, so if you look at the country as a whole, you’ve got the budgets being sponsored by all revenue. So it’s pretty heavy in terms of reliance and dependency on oil. That’s quite natural for any country in the region, like the Saudis as well. Similarly, we’re pretty heavily dominated in the oil and gas sector and that’s where most of the revenues are coming from. In Dubai in particular, and most of the oil in the UAE is situated in the capital, Abu Dhabi, much less so in Dubai, which is why in Dubai they’ve tried to build a much more service-oriented economy, and try to do as much as they can. Obviously it’s very very difficult, but they’re trying. Tourism is huge for them; that’s where they get some of their revenue from. Around 10 million visitors are expected to come through Dubai every year, so that’s where they get some of their money from. You’ve also got a port where they generate a lot of revenue from, and like I said, the government also has a lot of state assets within the country – we’ve got arms within banking, we’ve got real estate within hotels; so there are different means for them to generate revenue. By and large, though you do have oil, which is the most heavily reliant, and I think given our outlook and our prices with the supply and demand situation, I don’t think that’s going to be unhinged any time soon.

Jason:
That’s an interesting segway into the oil topic. What do you think about all of the North American oil that’s recently been discovered through new technologies and fracking and the natural gas – it’s all energy so it all goes into the same pot in a way. I know that’s a bit of a leap and I completely understand, but it is energy. Do you think that will cause, and with greater efficiencies and greater energy choices, do you really think oil in real dollar terms is still going to have upward pricing pressure? I’m kind of looking for real oil prices, not nominal. I kind of think we’re going to see it softening a little bit, but I could be wrong.

Jawad:
This is how I see it, right. You’ve seen oil prices more than tripling over the last decade. Despite that, you’re seeing oil production pretty much flat in that entire time frame. You’re seeing oil companies around the world really struggling to boost production levels. They’re having to deal with pretty sharp decline and depletion rates. Despite all the technological advancements to enhance oil recovery and whatnot, they’re still struggling. The likes of BP and Shell, and even Petrobras in Brazil for that matter – they’re all struggling to boost reserves, and we’re seeing conventional oil production really not meet the expectations. That’s where the lowest cost production is. For your oil sand and your unconventional oil that you discover in America as well, you’ve got a much higher margin of cost production. That’s one side of it. The other side is about the demand perspective. We actually haven’t seen annual oil demand fall over the last 15 years, despite the number of recessions we’ve had in the interim. So going forward, despite whatever troubles the merging market countries are facing today, given the rise in per capita income and given how we personally feel we’re very focused on the automotive sector and how we see the demand for cars rising and the transportation field of industry being one of the largest drivers of higher oil prices, it’s difficult to see how demand and consumption of oil will be offset by any production increase in the US. Just look at it, for example, over the last 18 months. Any production increase in the US has primarily been offset by declines and shut downs in the Middle East. Any net gains that you may have from unconventional sources, you’ll most likely see it being offset by depletion in existing fields or by violence and chaos. I think currently, we are of the opinion that despite what’s happening in Iraq, the risk in our prices is not sufficiently embedded. We actually think the risk is for higher oil prices from an economic perspective, as that begins to gather steam, as well as from a supplier perspective. I think there’s a lot of complacency around the discovery of oil in America and the rise of production levels and the reduced reliance on imports. I think we’re looking at a 5-10 year rise. I would still argue that the odds favor much higher prices. And the other point I would make is that as oil prices have hovered around $100, for example, over the last 18 months, the tolerance for higher oil prices is also increasing. You’re seeing consumer confidence in America rise as well as in line with gasoline prices, so I think consumers are becoming psychologically more prepared for higher prices, so their behavior is adapting to it. I think the flaw for oil prices is going forward has probably been risen to around $80, but I think the risk is for higher prices.

Jason:
Okay, so do you have a number on that? A number and a time-frame? And of course, I don’t deny that we may have higher nominal prices, but I’m talking real dollars. I always want to talk in real dollars. I think inflation is largely understated and will continue to be – I think we can count on that.

Jawad:
Of course. Look, I’ll say this. If you see a disruption over the next few months, you could easily see oil spike by another $20-30, so you’re looking at easily $140-150.

Jason:
I certainly don’t doubt, by the way, that there will be small ups and downs on the way to it. I’m just setting an overall trend.

Jawad:
I agree with you. I think we’re very bullish about renewable energy. We earn solar stocks, and I think there’s a lot of potential in renewable energy. We’re positive on solar, we’re positive on wind, we’re actually even positive on nuclear for a political reason based on the happenings in Japan, but we would say that despite the breakthrough in technology and in how solar costs have been lowered, it’ll take quite a while for it to make a real dent in conventional energy markets. Like I said, the biggest driver for oil really has been through transportation, so unless we can come up with some technology that will alter the energy mix used in transportation and vehicles – the demand pulled from that sector alone will be enough to keep all prices well met.

Jason:
We see a rising middle class around the world, of course, and that ties in with your transportation concept as well, so we shall see what will happen there. When we’re talking about real and nominal dollars, it just begs the question – we’ve talked about it a lot on the show, I had the founder and CEO of Overstock on the show, Patrick Byrne who was the first major etailer to accept bit-coin – I want to ask you: what do you think of alternative currencies and especially bitcoin, since that’s the most famous of the bunch?

Jawad:
It’s interesting with the developments surrounding the currencies, and particularly bitcoin because bitcoin’s been the most famous one of the lot and the most successful one so far. I view bit-coin as more of a technological achievement, as opposed to a currency, and I think it requires an explaining of the current ecosystem. So for me to explain that – you’ve got four sides to the bit-coin network; you’ve got the consumers who are actually the ones buying and selling bitcoins and using it to make payments, for example. Some are perhaps even saving in bitcoin. Now, is bitcoin really an effective store of value? If you bought bitcoin at $10, absolutely. But if you bought it at $1000, not so much. At the same time, you’ve got the FBI and the IRS saying that it’s not actually money, it’s property, so you’ve got a capital gains tax to deal with, so it sort of reduces the attractiveness as an alternative currency.  At the same time, another more important point, perhaps, is the fact the bitcoin is unconditional money. This means that you don’t really have any recourse in case you lose your coins, or an exchange fails, for example. Even before the Mt. Gox incident happened there were reports that about 45% of the exchanges failed, and in most cases with the investor’s money. The responsibility of exchanges is not that great so if you, for example, have money in a bank and the bank fails, you’ve still got recourse through insurance or through the courts to get your money back. In bitcoin, you alone are responsible to protect your coins, which is very difficult in an era where cyber attack is much more common. So there are some drawbacks for the consumer. Let’s say you move on to the merchant. If you’re a merchant, bitcoin transactions are convenient and they cost must less than traditional finance, but I would argue that merchants aren’t really in the business of taking currency risks and bitcoin has been extremely volatile. Whereas a typical currency would have volatility for around 5-6%, bitcoin volatility is upwards of 100%. Let’s say if you were a merchant who was super bullish on bitcoin and only accepted bitcoin as payment, well over the last 6 months you’d have seen your cash balances go down 50%. Like I said, merchants really aren’t in the business of taking currency risks, and again, let’s say you’ve taken bitcoin as payment, when you go and convert it back into cash for example, you’ve got capital gains to deal with. So that’s another issue. Let’s say you move onto the miners, which is the third part of the ecosystem. They’re the ones that get paid in bitcoin through their record-keeping services. You’ve seen the business of mining bitcoins going down quite a bit to date, and these revenues are down 40-50%. We’re seeing mining equipment sellers actually mention how the sales of bitcoin encrypting are down because again, the upkeep and the maintenance for these super computers is quite expensive, and with the decline in prices, it’s no longer as attractive. You’re seeing alternative currency and mining machines getting more popular compared to bitcoin because they feel it’s cheaper, so the mining business itself, I think, is being crowded out for only the big firms to play, and the individual miners are getting out of it. I do think it doesn’t sound or seem to be all rosy. The last bit of the ecosystem is the intellectual force behind it, and that’s the Silicon Valley and the tech entrepreneurs. They’re the ones that have made the breakthrough. It’s a technological achievement, and I think what they’ve achieved is they’ve triggered a surge in innovation and in digital money, so we’re probably going to see a series of innovations, and I think bitcoin is the first step. I think it’s not the ultimate solution because if you look at the current bitcoin establishment, they’re looking to fight the government and they’re working against it. I think that’s alright if you try to revolutionize print and music, but I think when it comes to money, you’re entering into an arena which is very sensitive and I think the traditional bitcoin community underappreciates the role and the history of money in society. I think they will most likely face drawbacks, unless they work with the government to make it a more acceptable means of payment. So until then, bitcoin will most likely be relegated to a community currency or serve as a payment within a niche market. It won’t be the monetary revolution that it’s being hailed as. It’s a technological achievement in terms of its price – it’s a speculative national asset that can be used as a medium of exchange, but it’s not the monetary revolution or it’s not the solution to traditional paper money in my opinion. But what we’re most likely going to see is extremely exciting developments in this sphere over the next many years.

Jason:
Are you bullish or bearish on bitcoin?

Jawad:
I will be bearish.

Jason:
So I agree with you because I think that anything that the central banks and the government cartel do not control, they’re going to find a way to squash. That’s just what I think. I don’t care about what a great technological achievement it is; it’s totally fascinating but that would not be enough of a reason to invest in it. If you think about it, digital currencies are the ultimate fiat currency. At least with paper, you can do what they did in the Weimar Republic – you can burn it in a fireplace and extract heat from it! With gold, it’s certainly got a huge history behind it, but better than any of those are things people can actually use that have utility: housing, bullets, food, water – all of that stuff has actual utility. Gold doesn’t even really have utility, unfortunately. So I’m not a goldbug either, but yeah, I just think that people like to say about bitcoin proponents that the government can’t control it, that they can’t stop it. Are you kidding? They can just make it illegal! They did it in China. It’s not legal to trade in heroin. We can’t legally engage in commerce with illegal substances. They can just destroy it.

Jawad:
And at the same time, I would also argue that what’s stopping governments themselves coming up with any money equivalent? What happens to bitcoin then? Let’s say you have an alternative to bitcoin – there are dozens of them out there. Let’s say you have an economy, and this is the most interesting bit, because if you have an economy where you’ve got bitcoin, altcoin, zerocoin, all these different coins, how do you actually determine value between each of these individual virtual currencies that don’t really have intrinsic value?

Jason:
It’s just a big mess, really. And the last point I would make about this is actually that – and again, this is where I have problems with the current thinking behind bitcoin – they argue that they want to be free from government, but I would argue that if you had a bitcoin economy and you had an incident like Mt. Gox, the same bitcoin proponents that are arguing for freedom from government would actually have to run to the government to bail themselves out. The system wouldn’t work. It’s not designed to work in the way it’s currently structured. This is why I said that they need to bring the government into the fold, otherwise it won’t really survive.

Jason:
That’s very interesting. Well good. What do you see in the investment markets or housing markets, just in general as we wrap up here?

Jawad:
So the way we work at Stray Reflections is we focus on developing investment themes that we see happening around the world, and we try our best to distill them into actual trade ideas for our investors, which include hedge funds and family offices and individual investors. So there are a number of different investment themes that we’re looking at right now – energy is one of them; like you mentioned, the growth of oil production in America and what that means; the growth and wider uptake of renewable energy we’re looking at quite a bit. Real estate is also attractive – in Europe particularly, real estate assets are looking attractive. We also are very positive on adjustment that we see happening in Asia, particularly with the likes of Japan. So that’s a bunch of investment themes we’re currently looking at. We’re positive in Japan as well, based on ergonomics and what that means for the country, so equity prices, I think, are going to head much higher over the long-term in Japan. I think it’ll most likely outpace the gains that you may see in Europe or in the US. And then you also have some unconventional investment themes like investing in Iraqi stocks, for example, so we pretty much scope the entire world to figure out where we should put our money, and we share that with our subscribers.

Jason:
Very interesting. Well, Jawad, give out your website and tell people where they can find your newsletter.

Jawad:
They can visit us on our website, which is www.stray-reflections.com.

Jason:
What’s behind the name? I’m kind of curious.

Jawad:
So one of my favorite writers is a Muslim poet by the name of Allama Iqbal. He used to keep a private journal where he used to jot down his thoughts and his random musings, his observations, his feelings, a random thought etc. and he called that private notebook Stray Reflections. So that’s where I took it from, and I believe that’s what we’re doing actually. We’re just looking around the world, trying to come up with ideas as random as Iraqi stocks to musings about life and how to pursue happiness.

Jason:
Well, Jawad Mian, thank you so much for joining us today and happy investing to you and all our listeners.

Jawad:
Absolute pleasure, Jason, thank you so much.

Outro:
The American Monetary Association is a non-profit venture, funded by the Jason Hartman Foundation, which is dedicated to educating people about the practical effects of monetary policy and government actions in 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 media@hartmanmedia.com. 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.

 

Do Borrowers Need Banks?

AMA9-30-14Banks are an essential part of the financial landscape – or at least, they’d like you to think so. But are they? New banking alternatives may be making the traditional bank loan a thing of the past.

The traditional banking model has been around for centuries, supersized to today’s massive institutions like Bank of America, Citi and J P Morgan Chase – the ones deemed “too big to fail even when caught red handed in some shady and downright illegal activity in the wake of the financial crisis of a few years ago.

The nation’s big banks were largely responsible for that crisis. Riding the expanding housing bubble, they underwrote massive numbers of highly risky loans that allowed unqualified borrowers to buy houses. But when those loans ballooned and the housing bubble burst, those unprepared borrowers were left with mortgages they couldn’t pay and houses lost to foreclosure.

As the dust settled, details emerged about widespread abuses on the part of those big lenders, including the infamous ”robosigning” scandal that had banks using fake signatures to block process foreclosure paperwork – often on houses that weren’t up for foreclosure in the first place. Add in a seemingly never ending string of Justice Department investigations and lawsuits – some civil, some federal – against Bank of America and others, and legislation demanding better accountability and trust in the nation’s lending system fell to an all time low.

That heightened oversight also meant new hurdles for borrowers. Lending standards tightened as banks tried to avoid penalties for writing bad loans. And interest rates and other fees made transactions more costly for many individual and small business borrowers. Even smaller banks felt the pinch, struggling under a new burden of regulations and oversight triggered by the sins of the big institutions.

Most of us have been trained from childhood to see banks as friendly depositories for our cherished savings, but the real business of banks — how they make money – is in making loans. And big loans to corporations and international entities make the most money of all. Even in the best lending atmosphere, smaller borrowers may be left out in the cold, with more limited borrowing opportunities and higher rates – if they’re served at all.

Enter a host of new alternatives such as monetary exchanges, peer-to-peer lending groups and crowdfunding sites. All these entities share one key feature: they offer a neutral ground for two interested parties to meet and conduct business. Borrowers can find lenders, sellers can find buyers, and individuals can join groups to spread the risk.

Digital currency exchanges may be the best publicized of the new banking alternatives. A whole culture sprang up around virtually anonymous digital currencies such as the Bitcoin and similar monies like the Litecoin, which could be used in any transaction that two parties agreed on. Exchanges provide an interface between the world of digital currency and that of “real” money, offering users a way to convert from one kind of currency to another, buy digital coin and conduct transactions without much of a trace. Much beloved by users in parts of the world that lack stable currencies of their own, the Bitcoin and others like it have survived a few dings to the image from links to online drug trafficking sites like Silk Road to achieve a relatively stable status as a legitimate kind of currency.

Peer to peer lending groups, made easy by the Internet, take the spirit of social media to the investing world. Entities like Lending Club cater to those small businesses and individuals who find it tough to get loans from established banks. These new lending alternatives position themselves as lending marketplaces, where people looking for investment opportunities and those needing funding come together. Like an online dating site, once the two parties meet up, they’re on their own. And while the sites advise participants to exercise due diligence, they don’t monitor the transactions once the parties agree to conduct business.

Crowdfunding takes the process a step farther. Sites like EquityNet, Crowdfunder, IndieGoGo and even Kickstarter let individuals and enterprises get projects that need funding in front of potential investors and supporters. There are no fees involved, and the project creators are free to set any terms they wish. Transactions are one time only and don’t ‘involve much by way of traditional lender paperwork. When the bank says no, these options give startups and new entrepreneurs a foothold for launching enterprises of all kinds, from buying real estate to creating a boutique baby shop.

Advocates of the new lending and money exchange models say they return the power to the people, bypassing lender fees and restrictions to allow two parties to agree on their own. They stimulate economies too, by helping launch startups and encouraging investment. And by focusing on doing one job and doing it well, they avoid much of the fraud and manipulation that came to light with traditional banks.

The downside, say critics, lies in the most prized aspects of peer-to-peer transactions. Though they’re completely independent of the banking system, they also lack the safeguards around traditional lending. Both parties are largely on their own if the deal goes bad. And the anonymity promised by Bitcoin exchanges and other sites means it can be hard to track illegal transactions and fraud.

Concerns aside, peer to peer financial exchanges are here to stay – and growing. Reflecting both a mistrust of the old ways and an eye to the future, peer-to-peer platforms may not put banks out of business – but for some borrowers, they’ll give those institutions a run for their money.  (Top image: Flickr/KevFoster)

Source:
Cohen, William. “Bypassing the Bankers.” The Atlantic Business. Atlantic.com 13 Aug 2014.

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The Fed’s Stimulus Strategy: Silencing Skeptics?

Money Talks – But What Does It Say?

The American Monetary Association Team

 

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The Fed’s Stimulus Strategy: Silencing Skeptics?

AMA9-16-14In the end, did hard easing work?

That contradictory term for Qualitative Easing version 3, the Federal Reserve’s controversial and much disputed stimulus plan, has been in the news and on the minds of economists and financial advisers since it was conceived in 2012 as the latest attempt to boost the nation’s economic recovery.

From the beginning, the plan to force interest rates to historically low levels faced harsh criticism from experts worried that it might do far more harm than good. But several months into the slow ‘tapering’ of the stimulus, the sky hasn’t fallen, interest rates haven’t skyrocketed, and the dollar has surged back stronger than ever. That’s news to silence the skeptics, but does it indicate a rosy future?

What’s Qualitative Easing?

QE3 is the third incarnation of “easing,” an unconventional strategy to jump start the economy by buying up securities and bonds in an effort to keep interest rates low. Banks that sold those securities to the government wouldn’t have to raise interest rates to consumers, who could then get more loans to buy more things, such as houses and cars.

Or so the theory went. This kind of strategy was first fielded back in 2009,the year after the famed bursting of the housing bubble and the historic collapse that saw millions of people losing their home to foreclosure and banks caught red handed in a variety of financial scams and schemes.

The nation’s consumer economy was in ruins. The banks held trillions of dollars in bonds and securities backed by mortgages – many of them held on foreclosed properties. Quantitative Easing version 1 was put into place in 2009, tapered lightly later that year and then rebooted as QE version 2 in 2011.

QE3, the current version, hit the scene in 2013 with the ambitious goal of buying up $85 billion worth of bonds and securities every month until further notice. When would the Fed “taper,” or wind down the plan? No one was exactly sure. It all depended on the health of economic indicators such as job growth and housing starts.

QE3 Under Fire

The very scope of the plan raised concerns. Criticism came from without and within, as the chairs of regional Federal Reserve banks expressed doubts that the stimulus would be sustainable.

Others worried that artificially holding interest rates to historically low levels thanks to the bond buyup would mean a drastic rebound once the stimulus was withdrawn. Rates would suddenly shoot up, they fretted. That could shut off the credit pipeline to millions of borrowers, casting a chill over the still recovering housing market and slowing the purchase of other kinds of high-end consumer goods. And that might depress the job market even further.

Other kinds of worries surfaced, too. Some analysts claimed that the plan, which was supposed to help average Americans get loans, actually did just the opposite, enriching banks, which happily took government money but never passed on those benefits to their customers.

International money market observers were also concerned. Thanks to the effects of the economic collapse, the dollar had suffered a bumpy ride in the global currency world, with cycles of slumping and then rallying briefly against other currencies such as the euro, pound sterling and yen. The plan also affected international interest rate calculators such as LIBOR, with ripples in markets halfway around the world.

Although critics had to grudgingly admit that the lower interest rates were helping to boost housing and help breathe new life into other areas of the economy, they weren’t convinced that the recovery would hold up once the Fed decided to really ease back on the throttle.

That didn’t happen until the early summer of 2014, when after months of debate and equivocation, the Federal Reserve under its new chair Janet Yellen opted to start a cautious tapering down, pruning a mere $10 billion off the monthly stimulus tab in response to better job numbers and more housing activity.

The financial world watched with bated breath. Critics waited to be vindicated.

But not much happened. Interest rates have begun a slow creep upward, pushed by market forces now that the Fed’s artificial manipulation is slowly being withdrawn. There’s been a slowdown in mortgage applications, but industry analysts blame tighter regulations ad stricter lender accountability for that as well.

Perhaps the biggest challenge to the plans’ naysayers comes from the performance of the dollar. Amid dire warnings that the stimulus could destroy he dollar and drive inflation to recorded levels, the greenback has surged in world money markets, posting its best performance in over a year.

What Investors Need to Know

The economy still isn’t in perfect health. And the Fed has the option of stopping –or revering – its taper-down if conditions worsen again. Interest rates can still raise more –and the housing market struggles with a 19 year low in homeownership. But as the dollar outpaces the currencies of countries that have taken a more conservative approach to managing their economic crises, even critics of “hard easing” are admitting that maybe the Fed was right after all.  (Featured image:Flickr/eguidetravel)

Sources:

Roesler, Matthew. “A Complete History of Quantitaive Easing in One Chart.” Business Insider. businessinsider.com. 25 Jan 2014.

Weisenthal, Joe. “We Might Be Witnessing the Final Humiliation of the Fed Haters.” Business Insider. businesinsider.com 16 Sept 2014

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International Conflict Hits Americans in the Wallet

America’s Forum With J D Hayworth

The American Monetary Association Team

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International Conflict Hits Americans In the Wallet

International conflict hits local walletsIt’s a small, small world, as the old song goes. And that’s increasingly obvious as events across the globe have the power to hit Americans hard at home. In a world that’s ever more connected, global conflicts can quickly become local ones, with consequences for the US dollar, energy reserves and consumer goods, and the economy as a whole.

The ongoing Russia-Ukraine crisis offers a real time example. Many Americans would be hard-pressed to locate this former Soviet republic on a map, let alone pronounce the names of its cities and leaders. But as sabers rattle, discourse heats up and the world ponders what to do, events on the economic front are rippling quietly through the countries of Europe and across the oceans.

At the heart of the battle is conflict over Ukraine’s unpopular leaders to pursue closer ties with Russia and abandon a pact with the European Union, which many Ukrainian nationalists hoped to see.

Rhetoric gave way to violence, with Russia trying to assert some of its age-old aspirations for dominance over the region. One key reason; Ukraine’s rich reserves of oil and gas, and the area’s agricultural productivity, which helps feed not just Russia, but also Europe and the rest of the world.

Energy and Agriculture

Though Russia dominated the news about the conflict, it’s not the only country with significant interests in Ukraine. The country hosts several major oil and gas pipelines that feed resources to Europe and the energy markets of the rest of the world. That could mean significantly higher prices for gas and oil in an energy-starved global community.

And while Ukraine’s status as the “breadbasket of Europe” accounts for about 20% of Russia’s agricultural imports, numerous other global powers including China, the US and Canada have a substantial interest in Ukrainian products. And disruption in agricultural production and exporting from Ukraine could mean higher prices and shortfalls of some products not just in neighboring countries, but anywhere Ukrainian products are sold or used for the manufacturing of food and other goods.

Business and Investing

Travel and tourism also take a hit during conflicts – and Ukraine’s pretty Black Sea beaches and picturesque landmarks won’t see many foreign tourists for some time. That affects not just the country’s own economy but also the travel industry as a whole, forced to readjust plans and prices to accommodate the risky political situation.

Foreign investments in real estate and other local assets can also be affected by a country’s political and economic turmoil. Foreigners with money to spend look for stability and reliability in their assets. And a shifting political and economic climate that could turn violent at any time makes investors leery of starting or continuing investments in local land and business.

Loopholes in US tax laws allow companies to practice “tax inversion” – a practice of moving operations to another country with lower costs and lower wage workforce in order to avoid US corporate taxes. The practice allows American corporations to take advantage of a country’s troubled economy buy partnering with a local business, which offers a way to move all operations offshore.

But serious instability in that region could compromise the US side of such a merger. And even though those companies don’t pay American corporate taxes on their earnings overseas, their US connections and subsidiaries do, in a domino effect that affects shareholders, workers and consumers at home as well as abroad.

Currencies and Debt

As political conflicts veer toward violence, a nation’s currency may take a tumble in world markets, losing value due to the instability. Financial experts expect the Russian ruble to take a dive in the face of world outrage and the specter of sanctions. But once a major currency falls, others scramble to regain footing, with repercussions for the values of major monies such as the US and Canadian dollars, the euro and the Chinese Yuan.

The threat of armed conflict isn’t the only reason a country’s currency and contributions to the world markets go on the rocks. Mismanagement and corruption, or forced regime changes in an area or country can also ripple out to touch Americans where they live-in the wallet. A poor economic outlook in one area can touch us thousands of miles a way – sometimes in odd ways

Currency problems, the availability of essential resources and the iffy nature of investing in unstable countries can all affect what we do with our money every day. The crisis in Ukraine offers just one example of how interconnected the world really is. It doesn’t take bombs and warplanes to force changes that affect people on the other side of the globe – sometimes; the merest fluttering of butterfly’s wing will do the trick.  (Top image: Flickr/jayalaharam)

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FICO Score Changes: A Boost For Risky Borrowers?

Money Talks — But What Does It Say?

The American Monetary Association Team

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FICO Score Changes: A Boost For Risky Borrowers?

FICO Changes Boost Scores for Risky BorrowersFair Isaac is changing his game. And that has some financial experts worried.

The nation’s premier credit scoring agency, the Fair Isaac Company, has come to an agreement with the Consumer Financial Protection Bureau to change the way credit scores are calculated. It’s a move that could boost lower end scores by 25 points or more by ignoring certain kinds of bad debt.

And that, financial experts fear, could create a landslide of bad debt, as risky borrowers are suddenly able to qualify for loans they can’t actually pay off. That scenario raises the specter of another economic collapse like the one that hit the housing industry back in 2008.

Why the Changes?

The housing crisis of ’08 put the spotlight on a bevy of bad practices on the part of both lenders and borrowers. As the housing bubble began to expand, banks made home loans available to just about anybody who asked. Adjustable Rate Mortgages made initial payments low and easy – and many borrowers didn’t understand that that could change dramatically in a few months or years.

Then the crash happened. Homeowners fell behind when those balloon payments came due. Houses everywhere fell into foreclosure. And the nation’s big banks were caught in a variety of fraudulent practices, including faking foreclosure paperwork and lying to customers.

All that led to the implementation of some wide-ranging legislation to try to keep it from every happening again. The Dodo Frank Act took effect in 2010 – an attempt to protect consumers by imposing tighter lending standards and penalizing banks that chose to keep writing loans that fell outside the provisions of the new Qualified Mortgage Rule.

But those standards locked many borrowers with lower credit scores and trouble meeting down payment requirements out of the process. The result? Far fewer loans for major purchases such as home buying – and that raised worries about the future of the economic recovery.

Enter the Consumer Financial Protection Bureau. Created under the provisions of the Dodd Frank Act, the CFPB’s job was to do exactly as its name says – to protect people from bad and misleading financial practices and to help borrowers in trouble.

Now, in a move that ironically reverses tenets of the Dodd Frank Act that created it, the CFPB is asking FICO to loosen its standards to allow more people with blights on their credit report to qualify for mortgages and other kinds of loans. It’s a move that, the government hopes, will jump-start the sluggish housing market and the economy as a whole.

FICO’s New Moves

FICO scores set the standard for most borrowing the US. According to a recent Huffington Post article on the CFPB’s actions, over 90 percnet of all loans in the country are based on FICO scores. Those scores help lenders set interest rates and determine their own level of risk. They’re also used by employers as part of the hiring process.

Fair Isaac is not a government entity – but in this case it’s changing major parts of its credit scoring process to address the CFPB’s concerns. Those involve:

Bad debt discharged through collections. If a borrower clears an unpaid debt through an arrangement with a collection agency, that debt won’t be a factor in calculating the FICO score.

Medical debt. It’s well known that medical debt, especially hospital related debt, is one of the leading causes of bankruptcy in the US. Under the proposed FICO changes, medical debt would have less impact on credit scores. And if it’s the only debt a person has, their score might jump 25 points or more.

People with skimpy credit history. It’s always been true that the less debt you have, the more of a credit risk you are. Now, FICO is implementing new ways to calculate creditworthiness for people with little credit history, so that they can end up with a higher score.

Who’s Affected?

The changes to FICO’s scoring system are intended to directly affect those who have been denied credit in recent years because their scores fall below the cutoff point for what lenders have determined to be safe lending.

That should open doors for these marginal borrowers to qualify for loans to buy homes and other big purchases, which in turn would jumpstart the economy. Advocates of the changes, which include consumer advocates as well as financial professionals, praise the move as a way to encourage more participation in the economy and help people build stability and security.

But critics of the move argue that the change in scoring is nothing but a numbers game. The higher scores borrowers would have under the new system don’t actually reflect an improvement in their ability to repay a loan – and ignoring bad debt cleared through collections won’t make the borrower’s behavior improve next time around.

That, they say, could create a backlash that forces lenders to tighten standards even more, or raise interest rates. Another housing crisis could hit as risky borrowers default again, with conseque3nces for the economy as a whole.

The changes to FICO”s scoring system won’t take effect until this fall, so it’s too early to tell which scenario will play out. But the CFPB’s plan to change the borrowing landscape has the potential to affect borrowers everywhere – even if their own credit is sterling.   (Featured image: Flickr/JanetRath)

Source:

Frankle, Neal. “How Upcomng FICO Credit Score Changes Might Rock the Economy.” The Huffington Post. Huffpost Business. huffingtonpost.com. 26 Aug 2014

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Money Talks — But What Does It Say?

America’s Forum with J. D. Hayworth

The American Monetary Association Team

The American Monetary Associaiton

 

 

Money Talks — But What Does It Say?

Money Talks But What Does It Say?What does your money say? Of course, most of the time, we’re more concerned with what money can buy – and what various institutions like the Federal Reserve and the megabanks are doing with it. But a country’s history, culture and values are written on the coins and bills it keeps in circulation. Case in point: the lowly US dollar bill, which contains in its often-misunderstood symbols and slogans the dreams and aspirations of its founders.

The images and words that appear on paper and metal money aren’t static. They change over time to accommodate new circumstances – and political conditions. US currency alone has undergone several permutations as a result of the country’s changing configurations and events like the Civil War. And in other parts of the world, new money commemorates changing regimes and leaders.

Money Talks In Symbols and Slogans

Because money acts as a kind of shorthand for what the issuing country stands for, every image and word printed or stamped on stands as a symbol with layers of deeper meanings behind it. And as those meanings become hazy with time, the symbols themselves can take on entirely new meanings their creators never intended.

Most officially circulated currency carries at least the image of a prominent individual, a motto or slogan, and a symbol representing what the country stands for. Beyond that, money can carry a variety of images and slogans.

Take the dollar, for example. The greenback and its cousins the bigger denominations are recognized around the world. Everybody knows who’s on the bill – George Washington  – but what done the other parts of the dollar represent?

Seals, Symbols and Portraits

Franklin wasn’t always on the bill, though. Back in the 1860s, the face on the dollar bill was actually that of Salmon P. Chase, the Secretary of the Treasury. And at that time there were actually several currencies in circulation as the Confederacy printed its own money and Texas declared itself a Republic with its own money too.

Those things aside, though, the key elements of American money haven’t changed too much since their creation not long after the country was born. And those mysterious symbols that raise the specter of black magic and Satanism were the brainchild of a designer inspired by the poetry of Virgil and the history of Egypt.

The face of the dollar, like other denominations, has a Treasury Seal. It consists of a scale, representing balance, a chevron with 13 stars for the 13 original colonies and a key symbolizing official authority. Until 10996 each banknote carried a Federal Reserve Bank designator that indicated where it was produced. Now, only the dollar and $2 bills carry this unique designator, a letter that proclaims the bill’s origin. Larger denominations simply carry the general Federal Reserve System Seal.

The Great Seal: Eagle and Pyramid

The dollar bill and others also carry the Great Seal of the United States – complex creation consisting o an eagle and an unfinished pyramid.

The eagle’s meaning is pretty clear – but even at that, its symbolism has stirred some controversy. The Eagle of course represents freedom and independence, soaring high and strong. There’s a shield on its chest, covered with the red, white and blue stripes and stars we’re familiar with: thirteen stars for the original colonies and blue for justice, white for purity and red for valor.

This eagle bears thirteen arrows in its left talon, representing war, and an olive branch in the right representing peace. But it’s the other part of the seal, with its mysterious eye atop a pyramid, that fuels speculation of darker meanings.

What does an unfinished pyramid with an all seeing eye on top say about the country? This symbol on the Seal, along with its inscription, “Novis Ordo Seclorum,” – “New World Order” — has fueled speculation about Masonic influences, alchemy and even Satanic references. But according to Charles Thompson, who designed the Seal in 1782, the truth is more mundane.

The pyramid, deliberately left undone, was meant to symbolize strength and duration. While that may call for a stretch of the imagination, the all seeing eye, said to represent watchful Providence, is clearer. And the inscription, inspired by Virgil, was meant to indicate that the birth of the country introduced a new direction into the world – not world domination.

The dollar and its relatives in the higher denominations have been redesigned and refurbished from time to time. Colors have changed slightly and the relative prominence of various elements has shifted. The symbols and messages on the greenback may have been misunderstood and even maligned, and its fortunes go up and down in the world’s money markets. But still it bears on its printed face keys to the early days of the country – and the vision its founders had for the future.  (Featured Image:Flickr/imagesofmoney)

Read more from The American Monetary Association:

AMA 90: Work the System with Sam Carpenter

AMA91: America’s Forum with J. D. Hayworth

Carla and The American Monetary Association Team

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AMA 91 – America’s Forum with J.D. Hayworth

J.D. Hayworth is a former Arizona Republican Congressman and host of “America’s Forum” on Newxmax TV.

 

Hayworth discusses why Bill Clinton’s Presidency so corrupt and what this corruption means for Hillary’s bid in 2016.

 

Hayworth contested John McCain and did not win in 2010. He explains the biggest issues he had with McCain. 

 

Hayworth finally shares how he went from sports broadcaster to politician.

 

J.D. Hayworth was a Representative from Arizona. Born in Highpoint, Guilford County, N.C., July 12, 1958, he graduated from High Point Central High School, Highpoint, N.C. and earned a B.A. from North Carolina State University in Raleigh. He’s a former television and radio journalist, before being elected as a Republican to the One Hundred Fourth and five succeeding Congresses (January 3, 1995-January 3, 2007). He was an unsuccessful candidate for reelection to the One Hundred Tenth Congress in 2006. 

 

 

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AMA 90 – Work the System with Sam Carpenter

Sam Carpenter author of, “Work the System: The Simple Mechanics of Making More and Working Less.” He joins the show to discuss how can people make more money by working less.

 

With a background in engineering, publishing, journalism and telecommunications, Sam is author of the book, “Work the System: The Simple Mechanics of Making More and Working Less,” (2009, Greenleaf Book Group, www.workthesystem.com). He is also CEO and majority owner of Centratel (www.centratel.com), a national telephone answering service that he has operated for 28 years. Sam is founder and director of Kashmir Family Aid, a 501C3 non-profit aiding surviving school children of the Northern Pakistan and Azad Kashmir earthquake of October 2005 (www.kashmirfamily.org).  

 

Outside interests include mountaineering, skiing, cycling, reading, traveling. “Work the System” won the prestigious “Best Non-fiction” award at the New York Book Festival. The book is now in its third edition. Sam also owns a consulting firm and distributes an on-line product, The Work the System Academy (www.workthesystemacademy.com) Originally from upstate New York he lives in Bend, Oregon and Seattle, Washington with his wife Linda.

 

Get “Work the System” at www.workthesystem.com

 

Visit the Work The System Academy at www.workthesystemacademy.com.

 

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AMA 89 – The Truth about Gold and Silver with David Morgan

David Morgan is Publisher of The Morgan Report. He joins the show to discuss what’s next for gold and silver after the FOMC’s latest announcement and the news in Iraq. 

 

In the interview, Morgan shares whether investors should trust this metals rally. He explains why silver is a better currency and more ubiquitous than gold. 

 

Morgan then discusses how levered banks are and if financial institutions have learned anything from the 2008 crisis.

 

Seduced by silver at the tender age of 11, David Morgan started investing in the stock market while still a teenager. A precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems ahead and reasons for investing in precious metals.  

 

David considers himself a big-picture macroeconomist whose main job as education—educating people about honest money and the benefits of a sound financial system—and his second job as teaching people to be patient and have conviction in their investment holdings. A dynamic, much-in-demand speaker all over the globe, David’s educational mission also makes him a prolific author having penned “Get the Skinny on Silver Investing” available as an e-book or through Amazon.com. As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. Additionally, he provides the public a tremendous amount of information by radio and writes often in the public domain.

 

Find out more about David Morgan and his work at www.silver-investor.com.

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Can Corporate Tax Inversions Harm the Economy?

Can Tax Inversions HarmtheEconomyThe chief financial officer of drugstore giant Walgreen’s just departed his job. And while the movements of higher ups at megacorporations often resemble a round of musical chairs, this particular job change sheds light on a new trend in corporate tax evasion: tax inversion.

Tax inversion is a milk toast term for a sweeping strategy that’s being increasingly embraced by large and some mid-size American corporations: partner with a foreign corporation, dissolve the US business and reincorporate it outside the country. While technically legal, this kind of move worries entities like the US Joint Committee on Taxation, which estimates that tax inversions cost the country – and its taxpayers – nearly $20 billion annually.

Tax Inversion Exploits Tax Code Loopholes

US corporate taxes are among the highest in the world, so it’s no surprise that businesses of all sizes are constantly looking for ways to avoid the hit. And while proposals for business tax reform have been on the table for over two years, Congress still hasn’t taken action on reforming the code in ways that would benefit the economy as a whole and create a more equitable tax structure.

But the existing code does come with loopholes that savvy corporate lawyers can exploit. And one of those is a provision that creates tax benefits, not liabilities, for companies that acquire foreign corporations and then declare that they’re based overseas.

At Walgreen’s, the departure of CFO Wade Miquelin came just before the company announced its intention to acquire Alliance Boots, a Switzerland based company that has no apparent connection with pharmacies. That acquisition lets Walgreen’s reconstitute its corporate headquarters abroad – and shed a large portion of its US corporate tax burden.

Offshore tax havens aren’t new, of course. Putting US money into foreign accounts to stash it safely away from the taxman is a time-honored practice conducted by businesses large and small – as well as numerous criminal organizations. But as that strategy gets riskier, corporations are taking a different tack – recreating their corporate identify itself outside the country. Making it easier: the ability to buy up, merge or partner with an existing company in that foreign country.

Tax Inversion and Domestic Tax Revenue

The result? The new entity on foreign soil doesn’t pay corporate taxes at home on profits made through its reincarnated, offshore, version. And that, obviously, means that tax revenue ends up conspicuously absent from the domestic tax base – a scenario with the potential to affect the health of the economy and the lives of American taxpayers in a multitude of ways large and small.

According to a recent Forbes article, the immediate impact of tax inversion is felt by company shareholders, many of whom are smaller investors. If they’re left holding the bag of nearly useless shares after the company moves offshore, they may end up selling off their shares of the company’s stock at a loss – and paying the higher taxes imposed on short-term capital gains.

That’s what happened with the recent merger of US based Forest Laboratories with ActivusPLC in Dublin. Forest Laboratories closed its US operations and reinvented itself in Ireland, leaving Forest Laboratories company shareholders to cope with unloading their shares and paying the resulting capital gains taxes at the higher short term rates.

That multibillion dollar tax loss, say financial experts, also robs the country of needed funds to keep the economy humming and boost sectors such as employment and maintaining the infrastructure. But not everyone agrees.

Although corporations practicing tax inversions are able to evade taxes on revenues made outside the country, they still must pay standard US corporate taxes on revenues fro inside the US. That, some economists argue, offsets the overall loss of tax revenues. And, they say, the process itself oaf dissolving and reincorporating the company brings with it taxes and fees that return to the government.

Joining the criticism of tax inversion are supporters of the President’s recent proposal, which has languished since 2012 without government action. They say that the current loophole that allows for inversion stacks the decks against those businesses that aren’t able to accomplish a foreign merger and restructuring, and robs the country of much needed revenues for essentials like road and bridge repair and emergency response funding.

Closing the Loopholes With Tax Reform

The proposed corporate tax reforms would make it harder for a US-based company to reinvent itself as a foreign entity and continue to enjoy the perks of its US based operations. Foreign shareholders would have to hold a majority in the new entity, rather than the 20 percent now required. Those provisions were part of an earlier bipartisan proposal made back in 2004, and reform advocates hope that the changes will survive.

In the meantime, though, tax inversion remains a hotly debated issue. And as more US corporations enter into unlikely partnerships with foreign businesses for the purposes of avoiding US corporate taxes, the ultimate effect on the economy overall may be more uncertain than it first appears. But financial experts warn that because changes to the tax code won’t be coming any time soon, corporate tax inversion will affect the nation – and its taxpayers – in ways large and small.

(Top image: Flickr/KevinFowler)

Sources:

Madhani, Amer. ”Walgreen’s CFO Departs Ahead of Tax Inversion Announcement.” USAToday Finance. usatoday.com. 5 Aug 2014.

Wastall, Tim. “The US Treasure Would Not Lose $20 Billion From Corporate Tax Inversions.” Forbes. Forbes.com 5 Aug 2014.\

Read more from The American Monetary Association:

AMA86: Crowdfunding with Matthew McGrath

What is the Fed and What Is It Doing With Your Money?

Carla and The American Monetary Association Team

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AMA 88 – Crowdfunding with Matthew McGrath

Matthew J. McGrath is the President and CEO of Optimize Capital Markets. He joins the show to discuss institutional crowdfunding and how the JOBS Act infringes on investors’ protections rights.  

 

Optimize Capital Markets is Canada’s first and longest running internet-based institutional crowdfunding company. The company operates optimizecapitalmarkets.com, an online website where businesses can request to get financing from potential accredited investors and institutions. 

 

Optimize Capital Markets was founded in September 2009 by Matthew McGrath, a former vice-president of private client services at the Royal Bank of Canada. 

 

Visit Optimize Capital Markets at www.optimizecapitalmarkets.com.

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