Hong Kong Real Estate & Cultural Decay & Peak Prosperity, The Crash Course By Chris Martenson

Jason Hartman records this show from Hong Kong and discusses what he sees in the Asian economy and real estate. He explains why he still believes US real estate is the best investment. In the interview section, Jason hosts Chris Martenson, co-founder of PeakProsperity.com and co-author of Prosper: How to Prepare for the Future and Create a World Worth Inheriting. They talk about abundance, cheap energy, and things that our world needs to change. They discuss the future and make predictions on inflation and deflation.

Investor 0:00
Once we did encounter some challenges because we were part of your network and because I have an investment counselor, I always felt like I had somewhere to go for an answer. I always felt like I had somebody with more experienced than me that I could lean on. And if Sarah didn’t know the answer, she got the answer.

Announcer 0:17
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it and now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:07
Welcome to Episode 1183 1183. This is Jason Hartman. Thanks for joining me today as I’m coming to you from Hong Kong, probably I’m going to call it the jewel of capitalism. And so interestingly, it is a district inside of a communist country. How unusual is that, right? Last time I was here was about 25 years ago, and it was part of the British Empire. And now it is, as you all know, part of China, but they’ve left it pretty much alone and it is amazing. I am going to play on a future episode a little bit of a speech for you some excerpts from it, by the hedge fund, Guru Kyle bass, and it is fascinating talks about China, and particularly Hong Kong and how completely overvalued the real estate market is here. Are you ready for this? I hope you’re ready are you sitting down? As you know, we recommend that you buy properties that are anywhere between $80 and maybe up to $150 or so per square foot. That’s sort of our typical thing. When we were in the midst of the Great Recession, we had good properties as low as I know I hate to bum you out with this $35 per square foot and the home that I live in, that I recently purchased in Florida, on the Treasure Coast of Florida, as they call it, that home depending on whether or not you count the garage space is either 40 or 54 times less expensive per square foot. than a property in Hong Kong? Yeah, I asked you if you’re ready for the per square foot price, you’re ready $10,000 per square foot.

Jason Hartman 3:15
You’ve got to be kidding me. I mean, really overpriced, insanely expensive, high rise properties in the US might be anywhere between, oh, let’s call it $700 and 1500 dollars per square foot. But yes, in Hong Kong, you can spend $10,000 per square foot. I know it’s on absolutely unbelievable. And the economy here is built on the wall street style economy, the banking economy. And as you know, we’ve talked many times about the difference between Wall Street and Street and how Main Street is the real economy. And Wall Street is the smoke and mirrors economy. It’s the economy of financial innovation. Yeah, financial innovation, whenever you hear that phrase run for the hills, because you know, it is something that is not built on reality. It’s something that’s built on smoke and mirrors. And Hong Kong, of course, is built on banking and financial instruments, pretty much the Wall Street economy, same concept, of course. And so Kyle bass in his speech, and I will play some excerpts for you on a future episode talks about the size of the real economy in Hong Kong, and the size of the banking economy in Hong Kong, the financial services economy in Hong Kong, and it is vastly overrated in financial services and underweighted in the real economy. The main Street Style economy. So very, very interesting stuff. And our guest today is a returning guest, Chris martenson. You’ve heard him on the show many times. And he has some interesting stuff. He is definitely more pessimistic than I am. Maybe a little more cynical. And I hope that’s a fair statement, Chris, but I think it probably is. But he has some great points about, you know, the world in which we live and the way it is structured and the way it’s built and how it is unsustainable in many ways. I guess. The difference that I have with this type of thinking is that I do think it’s unsustainable. I do think it’s smoke and mirrors economy, and this is all around the world. It’s not just the US. It’s not just Hong Kong. It’s not just anything, it’s just the whole world economy. It’s all what the late Alvin Toffler who was a futurist that I followed Since I way back to the days when I was 24 years old, and I loved his work, he and his wife, Heidi did some incredible work in many books. And I never got to have him on the show before he passed. But he talked about something called the super symbolic economy. And that’s the world in which we live. It’s where we have this world of symbols and instruments and derivatives. There is some real stuff there. But it’s many times detached from the fake stuff, the derivatives, the instruments, the financial innovation, the super symbolic economy. It’s just interesting. And remember, I’ve made that comparison for you before about the great recession. You know, most people consider the Great Recession. The real seminal date for the great recession was just over 10 years ago, and it was the day that Lehman Brothers collapsed. You know, this company was maybe what I think 156 years old, or something like that, and it collapsed. It was obviously a giant company with tentacles all over planet Earth. And you look at the world, the day before the great recession began, whatever you believe that to be, maybe it’s the collapse of Lehman Brothers, maybe maybe some other date, but let’s call it that date, or, you know, whatever date it was right? There was a date before the great recession started. And there was a date after the great recession started. And, you know, if you looked around at the real economy, nothing really changed. There was the same amount of gold on Earth, the same amount of oil, the same amount of real estate, the same, you know, number of widgets that every company on Earth was making. Nothing in the real economy really changed. But lots of stuff changed in the super symbolic economy, the smoke and mirrors economy, the Wall Street economy, the main street economy was pretty much the same. You know, you could count all the assets in the world the day before and the day after the Great Recession. And the assets were pretty much the same. Yeah, they changed hands, they changed labels, they changed symbols, but the real assets, or pretty much the same. And so I guess my difference with the sort of the doom and gloom thinking is that I think that the super symbolic economy, the smoke and mirrors economy, maybe, sadly, can just go on for a long, long time. A lot of people are have been predicting Doom for decades, and you know, maybe go back to Malthusian thinking for centuries. But it just hasn’t happened. So, you know, the question is, how much longer can the world kick the can down the road, and I think that’s probably for a very, very long time. So we’re in the game or part of the game. We’re not going to change the game. It is what it is. All we can do is play in the game. And my strategy, including many things, risk evaluation, inflation to step destruction, etc, can help you win that game. And we’ve talked about that on many past episodes. But hey, without further ado, let’s get to our guest today, Chris martenson, returning guest really very knowledgeable person. And I think you’ll enjoy this interview. And tomorrow, we have a client case study another client case study, talking about some amazing things he’s done in real estate starting with eight single family homes he purchased through our network, and has ratcheted that up to many, many more units. So I think you’ll like that case study coming to you tomorrow. And again, we’re here five days a week for you. So without further ado, let’s hear from Chris.

Jason Hartman 9:58
It’s my pleasure. Welcome back. Returning guest and that is Dr. Chris martenson. He is co founder of peak prosperity calm developer of the educational video series that I watched many years ago called the crash course, and co author of the book prosper, how to prepare for the future and create a world worth inheriting. Chris, welcome back.

Chris Martenson 10:19
Thank you, Jason. It’s really great to be back with you and all your listeners today.

Jason Hartman 10:22
Good to have you. Where are you located?

Chris Martenson 10:24
I am in western Massachusetts little town called Greenfield right on I 91. That cuts through Connecticut up towards Vermont.

Jason Hartman 10:30
You know, in our virtual world, I always think it’s kind of important to have a sense of geography. That’s why I almost always asked my guests where they’re located. So Chris, the economy is doing crazy things. I know that you’re talking about how the next 20 years will be completely different from the past. What do you mean by that?

Chris Martenson 10:49
Really, the larger sweep of the story that I’ve been telling for a while is that humans as a species across the whole globe, this isn’t an American centric story that we’ve grown kind of to the edges of our flask. And this next period of time is about learning how to adjust to some really, really big things, including this idea that you can’t grow infinitely forever in a finite space, whatever your fixed volume is. Now ours is the world. And we’ve got tons of data that says, Well, you know, in terms of freshwater soil, insect species that were kind of at the edge of what we can take, and as well, most of us eat fossil fuels. That’s just how we live unless we live in agrarian lifestyle somewhere in Africa. So we’re coming up on a very big phase transition in how humans are going to need to organize ourselves in very new ways.

Jason Hartman 11:41
It’s kind of a weird thing, if you really think about it, that the economy of the globe, like all economies are based on this concept of you got to keep growing, you got to keep growing and growth creates a whole bunch of what they call externalities, doesn’t it? And those externalities are the things you just address whether it be species extinction, pollution, whatever. But Chris, what else can you do? I mean, people just kind of demand the the, you know, we have growth that things get better. Does progress always. Or now maybe you want to dissect those two words progress versus growth, maybe they’re not the same thing. A lot of economists would say they are. But does it always involve the externalities that we’ve had in the past? Or can it be done differently?

Chris Martenson 12:32
Well, this is a great thing to dissect, because it really does need to be pulled apart. And so let’s take needs and wants, let’s separate those for a second. You and I, we would want more progress, right? We don’t need it, but I would want it right. I would love the next biotech revolutions to come along. I’m really excited by some of the technological progress we’re making. I think we can do things a lot better. I want all of that stuff. If it doesn’t happen. It’s not really terminal to this condition. So we want The progress. The need in this story, though, comes from our monetary system, it needs to keep growing. It’s like a shark, the proverbial shark that’s either swimming, or it’s dying, right? So it has to keep moving. And so our financial system requires this constant growth. And it would take a lot, you know, in the crash course does this you have to peel back and understand how it’s constructed and how money is created. Now, you know, all this stuff, but you know, if we can just hold that on faith as an article of faith, people can go to the crash course or other means and figure out if this is true,

Jason Hartman 13:31
my listeners understand because we’ve talked about it here ad nauseum that that money is lent into existence, you know, the concept of fractional reserve banking and all of the you know, it’s just a big giant scam, frankly, but it is what it is. We’re not going to change it or, you know, so I just kind of give in and I say, hey, align your interest with the powers that be right. Well, that’s good. Well, you know, that’s kind of fatalistic, I guess, but it’s good to understand. So we have the system we have now and it’s in some ways toxic, you would say, I guess, right? So what do we do?

Chris Martenson 14:08
First thing is it’s kind of like when if you’ve ever been to a or similar program or I have not,

Jason Hartman 14:13
but

Chris Martenson 14:15
if you’ve ever if you’ve ever been in a serious, life changing moment, there’s two ways humans change. Psychologists know this very well. We change through insight. Alright, so we got some critical insight. We listened to a Tim Ferriss podcast like oh my gosh, and we changed ourselves in some important way or listen to Jason Hartman right when we go Oh, with that insight, I will change that’s wonderful. Also rare the more common way humans changes by pain, we run up into some intolerable condition and go find and we change ourselves or the situation. So in this story, not enough people really understand the nature of both the problems. I’m using these words very carefully, both the problems we face in the predicaments we face with the differentiation between those being problems have solutions. predicaments just have outcomes. You have to manage them. as best you can.

Jason Hartman 15:01
Okay, so you know another way to say that would people change through inspiration or desperation? Right, right. I don’t know if it was Jim Rohn, or his copycat Tony Robbins who said that, but it’s a good way to look at it.

Chris Martenson 15:14
I like that. I heard that. That’s good. Yeah,

Jason Hartman 15:16
it’s the same, the same thing you said, but what change needs to occur? What is the change? So yeah, that’s how we change. But then what change would be needed?

Chris Martenson 15:25
Well, we have to begin living within the limits that exist out there. And so for a long time, a number of years, I was in corporate strategy, right. I wore the suit and helped corporations figure out how to do what they did better. And here’s the essence of a strategy lot of complex things you could learn at a big consulting house, but every strategy boils down to this. What’s your vision? And how are you going to get there, right? What’s the plan? What are the resources? And so what we really need to do in this story is understand that our entire story has changed. And we need to begin using things very wisely. So here’s a quick example. I love the technology. And I know a lot of people in the business who do extract shale oil from way down horribly, complex, amazing stuff. What they can do with this drilling technology is astonishing. But if you pull that stuff out of the ground so fast, all you’re doing is flaring the associated gas into the night sky. And using the resulting oil so that you can sell a few more years of f150 trucks, you’re probably wasting your opportunity in this story. And so the oil industry represents our resources. If we were going to do things differently, we would say, hey, there’s not an infinite amount. There’s some, we use it for really critical things. What are we going to use the remaining balance on, and if we come up with an idea that says, we have to use half of it to build a new future, and we’ll use half to sell more f150 trucks fine. But we don’t even have that articulation of that larger master plan. And that’s what people are starting to detect. You know, you want to talk about this idea of where’s the culture going the social pressures, we’re feeling That are building, whether it’s the yellow vest or Trump getting elected or the Catalonia breakaway or Brexit. These are all things that can be understood once you back up and see where we really are, in terms of the larger resource story, which by the way, spoiler alert, we can’t grow the pie like we used to, because the really easy to get resources are all gone. Hey, we’re getting after this deeper, harder, more dilute stuff, fine, but it’s more expensive. It just means the pie can’t grow like it used to. But every authority monetary fiscal is trying to push that car, you know, so that it can go the same speed that it used to go and it can’t. So this huge challenges and opportunities.

Jason Hartman 17:44
Yeah, yeah. Okay, so before you go on, let me play devil’s advocate with a couple of things you said, I’ll just rattle a few things off and you can address whatever you want or all of them. So Didn’t they kind of disprove the peak oil theory from the 70s? Haven’t people always thought hey, There’s this kind of, you know, Mel Fujian thing, and then some technology comes along to solve the problem later, which you do address shale. And you know, we can talk about fracking and stuff like that I get, there’s dangers and costs and so forth. And you look at the cost of, you know, just a gallon of gasoline. And I mean, adjusted for inflation, at least at the moment, gasoline is quite cheap. You know, my friend just posted on Facebook, that she went to Costco and got gas for $1 at a gallon. Now, if you adjust that back to inflate for inflation, that’s cheaper than it was a lot of times in the 80s, and maybe even the late 70s. It’s kind of amazing, you know, America’s and energy export are now and of course, we’re not talking just about the US, we’re talking about the whole planet. But you know, there’s some room for any debate on some of those issues.

Chris Martenson 18:48
Well, it’s a very complex area. I don’t know if we have time to get into all of it, but I totally get where you’re coming from. And if we could just peel the covers back just a little bit here. If you taken a flight where you flown over a shale basin and you look Out the window I’m sure a lot of your listeners have and you see that checkerboard quilt like like there’s like these one to two acre drill pads just scraped with monotonous precision checkerboard, it doesn’t look good.

Jason Hartman 19:13
A lot of this stuff people are doing to the, you know, the rain forest or whatever, you know, you look at that from above and you’re thinking, wow, this is a cost Well, okay, costly assumption,

Chris Martenson 19:22
right, the scraped areas will grow back if necessary. But here’s the point I want to make around that. Once upon a time when we were first in the golden era of oil discovery, and they’re discovering the guar field in Saudi Arabia or the Spindletop in Texas, those things are down about maybe 1000 feet roughly, and they stuck a straw down and then that straw would start producing three or 4000 barrels a day. And some of those straws put there in the 30s 40s and 50s are still producing three to 4000 barrels per day per well. It’s amazing. Now let’s look at one of those little checkerboard pieces. Let’s say we’re in the bokken and this amazing company parks this big giant rig on there they drilled down 10,000 thousand feet, they slanted sideways and they go sideways, another 10,000 feet, then they do 100 stage frack, maybe I’m using extreme examples, they might throw 15 to 20 million pounds of sand down that hole, millions of barrels of water. It’s just astonishing, right? And they do that. And that well starts flowing maximally at 1000 barrels a day to start. And then it’s lost 85% of that in just three years. And it’s producing maybe 40 barrels a day, in three years. So think of the energy it took to drill 20,000 feet and do all that other stuff. And what we got back out of that, because what matters in this story is what we get back from energy exploration, because that’s what you and I live on. That’s what everybody listening to this lives on unless they’re in the energy business directly. So when we look at this story, we can clearly say we went through the easy stuff, which was like a buck a barrel. Now I know the harder stuff, which is like $50 a barrel, and now we’re drilling into the source rocks. There’s no pre source rocks, right? We’re all the way down to the shale itself and it will last for a while, but many of the shale basins that got drilled 15 years ago are already past peak. And it’s a quick flash in the pan. It’s great stuff I’m not saying don’t do it, but to think it’s going to last like the old stuff did from the 40s 50s and 60s it’s just a totally different beast

Jason Hartman 21:19
are we moving to alternative energy is that i mean you know, we all hear and read about it but it’s not really anything real like wind and solar and geo it’s a drop in the bucket. Right?

Chris Martenson 21:28
Well, it really is a hydro is wonderful. They call it renewable but we basically dammed up most of the spots that are suitable though a few others but we’re not going to triple it from here for example, and geo who knows maybe geothermal Scott more to it Fingers crossed, let’s hope but the wind in the solar story increasingly we’re understanding now that a those aren’t replacements for liquid fuels, right? You can’t nobody runs jumbo jets on electricity yet nobody drives you know, a giant container ship across the ocean with electricity yet. I’m not sure that we will win. some amazing breakthrough in battery technologies when Fingers crossed there, right? But what we found is that at current rates to really replace our energy infrastructure at current rates of adoption, and people are all excited, like, oh, but Chris, you know, 50% growth rates per year wind and solar, wonderful, but at that rate, it’ll still take 400 years to replace our energy infrastructure. We don’t have 400 years in this story. Every model I’ve looked at says the global output of fossil fuels has a peak at some point. It just does. And we’ll drill into, you know, source rocks and maybe we’ll find a way to harvest you know, vacuum up the clathrates, the methane clathrates off, who knows, but there isn’t the easy cheap stuff. It’s now more expensive. This alone helps us understand why global economic growth rates have been sub par for the past 15 years. The pie just doesn’t grow like it used to. It’s easier to grow by with dollar a barrel Saudi oil that comes out as much as you want right now it’s a little harder that puts some sand in the transmission. Next stage of the story, though, so when you started with why the next 20 years, right? Well, this next 10 years, we’re going to see a lot of changes because all those old legacy fields are depleting very rapidly. And we’re going to have to see the world turn in an enormous way towards shale. And we’re going to drill that. But again, if we do that, without a clear understanding of why and how we’re using that energy to build out a new future, hey, it might be exciting. It might be profitable for a while, but it doesn’t give us that sense of belonging to a story where we can follow the plot line and say, I get it, I see where we’re going. And I think young people today are increasingly starting to lose the plot line in the story.

Jason Hartman 23:42
Now why are they losing the plot line? And when you say that, just explain that a little more.

Chris Martenson 23:48
Well, there’s a really important piece of work that that’s come out, you know, now they say that young people now have about a 50% chance of experiencing something called depression. By the time they were reach the age of 30. Now 50% that’s off the charts level. The problem is is that once they peel that back a little bit, they said oh no, this isn’t depression depressions either. situational meaning, you know, you lost your job your dad died, something happened or its chemical and we can give a some sort of a chemical treatment to that. Yeah, be careful that that’s a whole nother

Jason Hartman 24:17
conspiracy it is. Well,

Chris Martenson 24:19
well, for a while it can help boost you out. But if you’re on long term, I’m not a believer in that it just doesn’t work out pharmaceutical

Jason Hartman 24:25
drugs. I just say stay away from them unless absolutely necessary. Absolutely. But what they’re

Chris Martenson 24:31
finding is that of these things where they’re marking these kids down as depressed, they’re finding it’s not you can’t talk them out of it. You can’t drug them out of it. And so they realized there’s a different word at play and that’s demoralized. Right. And so what happens, you know, as opposed to a depressive disorder, demoralisation happens, it’s really an existential breakdown. It’s what happens when your cognitive map just doesn’t match up with reality anymore. So this past week, before we recorded this in Europe 10 Thousands of students, they did a school strike and marched. And they were doing it around climate change and their beliefs that climate change offers them no future. Right? And so that’s an example of what happens that their prime message Jason was, Why should I study? If the world’s just going up in flames like that’s their cognitive map says, I’m being asked to participate in a system and become a good student so I can get a good job. So I can participate in a system that I hope I’m trying to hold this other belief that says, that system is destroying the planet, and it can’t reconcile those two things. So out they go marching, right. And I’m not here to either say anything about whether they’ve got the right message or the right cognitive maps. But so many young people are reporting that demoralize sense of saying, I don’t have a sense of meaning or purpose. And fundamentally, the consumer culture that we’ve grown up in, it’s kind of meaningless, right. You know, it leads to a lot of people. You know, we just this past week also saw the data that said people were either drinking or drugging themselves to death or Crete committing suicide directly at the highest rates ever. Yeah, right. So that’s that comes out of that demoralisation again. So that all sounds like problem definition, Chris, where you going with this? To me, there’s also that’s the fuel as well, because again, if people are either going to change from pain or insight that pain is here, and the question is great, what are we going to do with that? And I think this is where it’s particularly young people are coming together and saying, Hey, can we imagine a different better future for ourselves? And the answer is, of course, we can write, we can always do that. But we’re starting to feel it’s a very complex story where, you know, because of how the central bank’s did what they did, they created this enormously unfair wealth gap. Because oil is no longer is cheap. It’s still abundant, but not as cheap as it used to be. It’s 5060 a barrel not 20 anymore. Because of that. We’re starting to experience you know, economic growth, just get a little laggy on us. And oh, but now we’ve got 250 trillion of debt outstanding in the world. that’s creating its own pressures. And you know more people with student debt. All these things are pressures that come together and they’re synthesizing into this next 10 year window. And it’s going to create huge social upheavals already started. That’s what the yellow vest protests are about. It’s going to create enormous political whipsaws, which is going to be very hard to plan for, like, how would you go from Trump to Bernie Sanders, if that’s the next switch, if that’s how it or

Jason Hartman 27:23
or Obama, Trump

Chris Martenson 27:24
or Obama to Trump, that’s a sort of political whiplash that as a business person very hard to plan for. And it creates cultural upheavals as well. And a lot of these are reactions to the stimuli that are coming. And my work is about helping people back up enough so that you can see what the stimulus is, so that you can choose how to respond rather than react to the situations because if you’re in reactive mode, you’re going to get worn out, you’re going to get burnout, you’re going to get demoralized. And that doesn’t have to be the case, but if we can see what’s happening, and understand it and it’s not personal, and we can obstruct ourselves, I think we have a better chance to position ourselves personally professionally for what’s coming.

Jason Hartman 28:06
Okay. you’ve alluded to the culture war a few times, just here in the last few minutes. take us into that a little more. And I call it the culture war, maybe it’s more accurately called cultural decay. I just, I am not optimistic about the sort of the ethos of Gen Y and Gen Z. Maybe I don’t know, Gen Z well enough, yet. Nobody does. But these are the most catered to generations in human history. You know, certainly there’s a lot of talent and a lot of ambition in those generations. But by and large, there’s a lot of apathy too. And you’ve alluded to it, I mean, just now, you know, it’s like this sense of, you know, what’s the direction what’s the point and a lot of it is, you know, when you grow up looking at a small screen, and you’re worried about what everybody thinks of you all the time on social media. Of course, that impacts as Everybody, not just them, but they’re really, you know, it’s like their life. You know, there’s this sort of like connection but disconnection at the same time, it’s hard to wrap one’s head around it in England, they’ve appointed a, like a minister just to address loneliness issues. These are, you know, major social problems people are so isolated nowadays, but yet they’re connected at the same time. So, how do we reconcile this?

Chris Martenson 29:27
Well, gosh, a lot of a lot of very interesting directions to go with all of that, you know, I was recently I was watching a former Facebook executive come out and say, Oh, my God, this stuff is absolutely horrible. This this product we created now won’t let my own kids use it. Right. And, and that’s because there’s been this incredible explosion of knowledge about how our brains are wired and how we are as as organisms and primates and what the dopamine pathways look like and what reward centers do and gamers now, who are game developers, you know, boot camp for game developers is all about the dopaminergic pathways, and how to Boost them, and what’s the right frequency and pacing of rewards and scaling them and all of that stuff, right? So the game looks like fun to you. But somebody spent a lot of time figuring out how to map into your pathways. And by the way, you know, cocaine and gives you a dopamine burst. So people are, we’re going to discover, I think, just like, GPS came out, right? I love the technology, I can’t drive through Boston, I won’t go anywhere. Without GPS, you know, my GPS map goes off, I experienced panic. You know, I love the technology. And it also allowed fishermen who used to sail out six hours or two days into the ocean, drop their net somewhere and scour around for a bit to actually pick up six inches to the left of where they stopped last week. And because of that fish stocks collapsed all over the world, because the culture of fishing wasn’t ready for the technology. And so I think a lot of what you’re talking about here is we have these wonderful technologies. I love my smartphone. I love all the apps. I love what it can do and we’re starting to find out. It’s like every technology it’s a two edged sword. You know, we might think What edge is blunter than the other is sharper. So we like it. But we’re going to discover and we are discovering that children raised in that environment of being constantly manipulated, if you will, through through the dopamine and other pathway experiences, that they don’t necessarily have the fortitude or the skill set for handling complex stuff, right. And by the way, even going down to your local town hall and trying to get involved in a decision to whether or not to you know, raise fees on a parking garage is a complex sort of a decision that requires a lot of, you know, grit your teeth and fortitude. So, you know, I think there’s a case to be made here to say that the kinds of challenges that we’re about that we’re really starting to face are really hard. They’re going to call for sacrifice. There’s no immediate gratification to be seen anywhere. And then how are people going to react and vote as they carry forward into a world where there’s a lot of really complex stuff, guess what, we’re going to fumble around for a bit and This story.

Jason Hartman 32:00
Yeah. So the future of the economy inflationary or deflationary? What do you think? Next 10 years?

Chris Martenson 32:08
Yes, yes. Here’s Yes. Here’s why

Jason Hartman 32:11
talk about Hey, listeners talk about Chris betting on red and black at the same time, right?

Chris Martenson 32:17
Come on, you can’t do anything. You need to get yourself a one handed economist. So here’s why I say yes to that. First, the deflationary forces are there they’re very potent and if they were allowed to take their natural course, we would see a lot of deflation happen. So deflation meaning let me define it, it’s a destruction of the overall stock of money and credit is money. So if you look at where we are with auto loans, it’s saturated market. You don’t keep saying student loans like those really wanting

Jason Hartman 32:46
this time not real estate loans now i don’t think

Chris Martenson 32:49
now what was so you know, watch your segments carefully commercial might have a different story to tell you then real estate in residential areas, but leaving that aside, we have a lot of debt in the system. It’s just crammed in. gills. And so deflation is ready to take over. The central banks have no interest in deflation whatsoever. So they’re going to keep pumping as hard as they can to see if they can create inflation. And so you know, my prediction for the next we’re going to have another deflationary scare, we’ll see the markets fall a bunch will see, you know, things start to maybe there’s an institutional failure, maybe even a sovereign failure like Greece, we don’t know. But it’ll scare the central bank’s enough that they’ll go to the next round. And that next round is not money for wall street. This has got to be money for Main Street. This is where I don’t people have been talking about the mmt theory, which is more just you know,

Jason Hartman 33:40
deficit spending. Give me a break. I mean, yeah, I mean, modern monetary theory. You know, I had Mike Norman on the show. And he was interesting. People love that episode. He actually hung up on me when I asked him a question. I mean, I just asked him a question. You know, and then I had another nmt Professor on last week from I don’t know, maybe it’s Berkeley or something. I can’t remember. You know, that just seems like a fantasy. Like you can’t just spend and create prosperity with spending? I mean, well, actually, maybe you can we have been doing that it’s just artificial is all. But that’s a minor detail.

Chris Martenson 34:12
Well, there’s a lot of critiques about mmt too much to go into here. My fundamental critique is that I think they have it upside down, and they believe that money, money is the thing that creates the production. And so if we just had more money than we could get production, it’s exactly backwards. As far as I’m concerned. Money is just this medium of exchange and production comes from real needs being met by real goods and services. The biggest critique I have of it is they just assume everything into existence. But leaving that aside, you know, you can always the showstopper is show me one place in the world were empty has been applied and been successful. So it’s all academic theory right now. There is no example.

Jason Hartman 34:48
Great point. I’m so glad you said that. Because I would say the same thing for its derivatives of communism and socialism. Show me one point in history or place on earth where those systems have been successful. And then everybody’s going to say, oh, Scandinavia, not really I’ve, you know, busted that myth a few times on the show, but again, too long to go into. So yeah, go ahead. But that’s great. Great question. Yeah,

Chris Martenson 35:13
you know, where this is all going to go though is so let’s imagine, though, that you’re part of the 99%. And let’s imagine that your health insurance bills have been going up just your premiums, you’re not even sick, they’ve been going up at I don’t know, 589 10 15%, depending on the year, in even when you try and use it, it’s just this horrible experience. And you know, it’s just not good and all the neoclassical economists and all the Republicans and Democrats have managed to make their class the protected class very happy and healthy. They’ve offshored all the jobs and, you know, capitals, one this story and Labour’s really lost out. It’s not a hard stretch to imagine that people weighing the balance saying, well, we have this sort of crony capitalism. It’s not really working for me and somebody is offering me this more socialist sounding stuff but you know, free education and in a much cheaper healthcare experience that sounds better. I’ll try that right. I think people are ready to try stuff. And I’m not saying I support it, I’m saying I understand it. And that’s the pressure that’s coming forward because so few crumbs have been left at the table for the average person. So that that’s really the social pressure that’s building up. And that’s why it’s essential people understand the headwaters of the Nile in this story is that central banks cannot print up prosperity. They are redistributive organizations. And they’ve been reverse Robin hooding this for a while they’ve been taking from the many to give to the few. And I understand why they thought they had to do that it was a crisis. But the crisis should have lasted six, eight, maybe 12 months. They’re 10 years into this, they don’t know how to get out of it. And so they’re a little trapped and stuck. And so they’re gonna keep printing and that’s why when you ask deflation, inflation, first deflation, enough to scare them, and then they start printing like crazy. And you are going to detect that as one time temporary tax cut no taxes. owed this year, that’s money straight in your pocket, maybe a refund for last year as well. If they go further, maybe it’s a check direct from the Treasury funded by the Federal Reserve, we don’t know. But that’s what money for Main Street looks like. And once we get to that point, that’s where I tell my listeners, that’s when you have to have your buy list ready, you have to know where you’re going to invest because I want you to run not walk to those things. And that includes real estate. This is the hard asset, store it you know, the tangible real asset side of the story. Once we get to that money for Main Street, you don’t want to be holding the paper claims anymore. You want to be holding the real assets. And of course, those is you know, those are harder that you don’t hit the easy button and buy a Bitcoin or share of IBM, you gotta run out and understand your markets and to have a team and know what’s going on. And it just takes more work.

Jason Hartman 37:48
Yep. I couldn’t agree with you more. And you know, the hard assets are real things. They’re real commodities that people need. They could be you know, metals, they could be real estate, they could be, you know, food and water and bullets and ammunition me I mean, you know, just real things. That’s what it always comes back to, you know, you can play games with the Wall Street economy, all you want with financial engineering with the central banking system. It’s all just a big game of smoke and mirrors and at the end of the day, it all comes down to real hard assets. That’s what really is there when the smoke clears. Right?

Chris Martenson 38:26
Absolutely. So, you know if I’m right and we get this deflationary pulse first, what’s the best asset to hold? Well, cash, you know, it’s cash is a legitimate position. Obviously, keep your hard assets if you’ve got them if you have positive cash flowing properties, great, keep them But otherwise, you know, this is a great time to sort of just get ready, get your buy list ready. You know, I live in New England. I’m pretty excited by you know where the price of woodland might go and I like woodland for a lot of different reasons. I love what’s possible in a lot of different real estate niches that are up and out there. And again, real estate isn’t a single asset class obviously, it’s a bunch of bunch of little ones, but I love some of the stories that are coming in, down there residential assisted living, you know, or the collapse of the large brick and mortar retail stores that’s going to have a huge impact on patterns of where people live, work, eat, play. So these are all big trends. I love trend investing. I do believe in my heart of hearts that 2000 was a bubble. It was bad. It was ill advised. It was stupid. We shouldn’t have done it. It was a credit bubble. It was Greenspan trying to replace a business cycle with a credit cycle. It blew up we should have said that didn’t work. But they fished around and they got this guy Bernanke. He said I know how to fix that we just didn’t do enough. So he went up and blew up a second bubble and we call that the housing bubble. But it was bigger than that. And that blew up and that should have been the learning instead, they tripled or quadrupled down depending on how you like to add stuff up and went on a zero percent negative interest rate blowout extravaganza that was global. We got an everything bubble. And here’s Look, I might be wrong. I’m not confused. Credit bubbles burst in when they Do they’re worse than business cycles. So the thing they were trying to save us from they replaced with something worse. You know, we got rid of the cold but we got cancer. It was just awful what they did.

Jason Hartman 40:10
Yeah, it’s really something else. these are these are complex issues. And it’s just very important that people, study them and really, really pay attention all this stuff. Chris, give out your website,

Chris Martenson 40:20
peak prosperity, calm and we got a lot of information there a lot of its public and free and we also have a subscription newsletter for people who like to go a little deeper into these issues.

Jason Hartman 40:31
Fantastic. Well, Chris martenson thanks for joining us again.

Chris Martenson 40:34
My pleasure.

Jason Hartman 40:36
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