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AMA 403: Reducing Your Investment Risk with George Gammon, Part 1

Jason Hartman, real estate expert, reveals HOW YOU CAN MAKE MORE MONEY WITH LESS RISK! On this episode of the Rebel Capitalist Show with George Gammon, Jason takes a deep dive into his “Risk Evaluator” for real estate. If you’re interested in real estate investing this is a MUST LISTEN.

Website:

www.JasonHartman.com/Properties

www.GeorgeGammon.com

CARES Act, HEROS Act Stimulus with Julio Gonzalez

In today’s episode, Jason Hartman interviews Julio Gonzalez, founder of Engineered Tax Services, a licensed engineering firm that focuses on tax benefits at federal, state, and local levels. Julio shares tax credits associated with investing and real estate at the federal level. They talk about reusing properties like hotels and shopping centers to affordable housing and redistribution centers.

Announcer 0:01
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.

Announcer 0:12
Welcome to the American monetary associations 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 0:29
It’s my pleasure to welcome Julio Gonzalez to the show. He is the founder of engineered Tax Services. They specialize in helping companies, developers, manufacturers gain tax credit information, they consult on that. And he has a lot of insight information into what the economy’s doing, by nature of doing that, I’m sure. And today, we want to talk about the stimulus packages, the cares Act, the heroes act, let’s kind of dive in to see how that might affect a potential for recovery. Julio, welcome. How are you?

Julio Gonzalez 1:01
I’m good. Thanks for having me. I appreciate it.

Jason Hartman 1:03
It’s good to have you give us a little background as to, you know, maybe just quickly what you do. And you sort of see things early in the economic cycle, if people are buying equipment for manufacturing facility, if they’re going to be developing properties, you know, they’re consulting with you and x asking about tax credits, and what’s available to them. So you’re probably very early in seeing what’s going to happen in the economy. years hence, right?

Julio Gonzalez 1:30
Yeah, there’s no question about it. We do tax credits in the areas of manufacturing, real estate structure infrastructure. So clearly, we are seeing it in progress before the public sees. And certainly, you know, we have a good feel for those economies and how it ultimately impacts our national economy.

Jason Hartman 1:51
Yeah. So given that, what are you seeing, we know that real estate development is booming? I mean, there’s a massive shortage in housing, especially now, with COVID. And then the race riots, people are fleeing high density cities, and they want to move to the suburbs, which can’t blame them. I think they’re making a great decision getting out of the cities. So tons of demand. I mean, it’s maybe counterintuitive, you know, three, four months ago, everybody thought the world was coming to an end. But it’s feels like the complete opposite is happening. What do you think?

Julio Gonzalez 2:21
Yeah. Well, I think there’s been winners and losers in the real estate. I think you’re right. I think people are moving out. And that’s creating a housing shortage. And yeah, obviously, demand. But you know, we have retailers, you know, the big malls, the problem now the hotels are suffering, right. So we have winners and losers. And certainly, you know, we’ll figure out how the losers adapt. And the winners are certainly taken advantage of the changing times for sure. Yeah, definitely.

Jason Hartman 2:49
Do you do you get involved when it comes to tax credits, in a reuse of properties, reuse of retail properties, reuse of hotels, I mean, some of those are trying to turn into residential, I have a buddy of mine that’s doing a deal on a hotel property to turn it into low income housing. You know, those are pretty small homes or condos or governments, you know, to turn hotel rooms into apartments. But do you get involved in that? Do people consult with you on tax credits there? Or is that not a big thing?

Julio Gonzalez 3:20
Yeah. I mean, that’s what they do. And we’re seeing tremendous amounts of hotels shifting to affordable housing, right, small units. And I think that’s something we’re going to see, especially in the big cities, and the regions where, you know, there’s a demand for that, and no demand for hotels, and the hotels are closing foreclosing, and, you know, so what’s the alternative for that kind of product? And it really has been in the affordable housing.

Jason Hartman 3:49
But I can’t imagine that’s going to work very well. I mean, I know there will be some of it. But I just don’t think it’s a big, big trend. You know, I can’t see it that way. And plus, you know, most of these hotels have one of the danger zones that I think people are fleeing from and that’s what I call an elevator. You know, that’s Yeah, that’s a if you’re worried about a virus, you do not want to be in an elevator, that’s for sure. And so typically, a hotel is a high rise or, you know, at least a couple three, four, storeys, you know, four storeys, I guess, would be super common configurations. Yeah. So we’ll see how that goes. What about, you know, retail properties, shopping malls, you know, or just shopping centers?

Julio Gonzalez 4:29
Yeah, the rates really are trying to go into these shopping centers and create distribution centers from them. And, you know, try to redesign them in a way that, you know, we’ve seen distribution be a real winner in the real estate industry, where the malls have been the real loser, but maybe that was coming anyway. Right. You know, maybe that was something that just got accelerated through this pandemic.

Jason Hartman 4:53
Yeah. And I think that’s a good point. A lot of stuff has been accelerated. No question about that. I don’t know. So You know, with a stimulus, you know, with a government program, it always, you know, encourages bad behavior, if you will. And when things started reopening, employers were really struggling to get people to come back to work, because they were actually in many cases making more money sitting at home on the couch than working with it with a bonus stimulus. Right. Or, or they were using it to gamble on Robinhood in the stock market. That’s right. That’s fine, great, crazy stuff. Right. So tell us about the last program and then the possibility of the new stimulus.

Julio Gonzalez 5:30
Yeah, I mean, the cares act was really kind of a temporary band aid of programs that would hopefully get us through, you know, the summer, thinking that by then we would have addressed the virus in a way that maybe we were finding cures, or maybe we were coming up with vaccines or better ways to adjust to it, but that hasn’t, you know, really played out. So, you know, the next step is to have basically the cares to program or the heroes Act, which would, you know, one thing, right, we’re doing the $600, extended vacation of the basically the payments going out. And, you know, the Senate doesn’t want to extend that anymore through the heroes that they feel that 10 million jobs are sitting at home, because they’re getting that extra $600, in benefit to do so. And so if you saw their version of the bill came out yesterday, they said we would compromise, maybe we would do $100, maybe we would do $200 to people under a certain income level. But we certainly weren’t going to extend the $600 to keep 10 million jobs from staying at home.

Jason Hartman 6:37
Right. But what if people can’t go back to work? What if you know, their local government or even their state government has said, you got to stay locked down, then what do people do?

Julio Gonzalez 6:47
Yeah, and certainly the house feels that way and wants to get that $600 extended, and the senate feels it should be something lower than that. I mean, here’s the risk. It’s like, okay, we continue to put this money out, we increase our debt. Right. And I guess that debt, is that a good investment? If we continue to pay that out? Will that ultimately stimulate the economy or produce into a worse economy? And that’s what I think they’re trying to debate right now between the House and Senate.

Jason Hartman 7:15
So with all this debt, and this money creation, I mean, it’s absolutely crazy that it’s like, you know, the government just acts like we can just create funny money out of thin air forever. And, you know, there’s no consequences. Are there consequences? You just alluded to that so?

Julio Gonzalez 7:30
Well, I mean, the consequences, I think, are could be traumatic. I mean, it could be massive inflation, you know, that we follow up with this? And how are we going to pay it? And, you know, we’re paying all this money to interest and debt, you know, how do we pay for other things, infrastructure and other things? I mean, there’s only so much money that comes into the tax system, right to the IRS and Treasury that we pay, right? And if a lot of that money is going strictly to debt, then how do we grow the economy? How do we have other programs? It would be challenging,

Jason Hartman 8:04
but you know, the magic question is, can we defy gravity and just create new fake money forever? And, you know, build roads and give people bailouts and stimulus and, you know, bailout? American Airlines and whatever else we want? I mean, I don’t know. It’s people are asking, where’s all the inflation from, you know, the Great Recession stimulus from now? But I think they’re asking the wrong question. How would it have been differently if they didn’t do that? There certainly is some inflation and in you know, tuition, which that’s a whole nother argument. That’s a complete ripoff. Obviously, health care, you know, food prices are going through the roof. They’re at a five decade high right now. And I’m noticing that, you know, every time I go to the grocery store, you probably I mean, we live near each other. So you might shop at that same Trader Joe’s I shop at on PGA Boulevard, sometimes that’s right,

Julio Gonzalez 8:55
you know, and I was there. And, you know, it used to be $80 for groceries, and now it’s 121 30. You know, it seems like I’m getting kind of the same amount of groceries. So it’s prices are going up aren’t that well, that’s that’s really what impacts, you know, the consumers, right. I mean, the groceries and those kind of costs housing. Right. And so those are big challenges. Right, that we have to ultimately you saw the Tea Party, right, the meadows and the other senators, you know, they’re afraid to put out any more debt. You know, they really are truly scared of the consequences of that and trying to come up with a plan that maybe doesn’t increase the debts but encourages. Yeah, other behavior through credits. Yeah.

Jason Hartman 9:45
Interesting. So you don’t sum it up for us? I mean, where do you think we’re going? Well, you know, do you have any predictions on what what’s coming next?

Julio Gonzalez 9:53
Well, I think, you know, clearly we’ve seen some good signs that some of these vaccines are in trial. Phase Three, phase They’re having some good successful like the heroes AG, they want to put out $1,000,000,000,000.20 5% of that $230 billion is for the vaccine and finding cures. So that’s a big part of it. The other part, bailing out the industries that have been heard the most, some stimulus money going back to the individuals, I think they’re trying to quantify the amounts, find the recovery, right? Because once the virus goes away, you know, I think we would see the economy come back if we don’t go too far into Great Depression, right? If we kind of continue to stabilize and open up and get to a point where the vaccines kind of kick in, and then we can see better days.

Jason Hartman 10:42
And, well, vaccines take a long time. And nobody knows if the vaccine will be safe. Certainly anti vaxxers were out before but I think this one, there’s even even more concern, and also vaccinating 7 billion people. I mean, yeah, that doesn’t happen in a month. Okay. It probably takes, I don’t know, how long does it take to do that to manufacture all those vaccines and administer them? That’s good. That’s gonna take years. I mean, I mean, you’re right. I nobody know. Right? It’s never been done. Right. Right. Yeah. Wow, that’s something, um, anything else you’re seeing that you want to share? Or, you know, maybe share some insights into, because we have a lot of real estate investor listeners, you know, some of the things that developers do in terms of tax credits they get and things like that. I just think that’s pretty fascinating, kind of behind the scenes world, that the typical real estate investor, obviously the typical real estate consumer, they don’t see it, they don’t think much about it. What levels of government are you dealing with? Is it just local or?

Julio Gonzalez 11:45
No, it’s federal, it’s state, and local as well. So like there’s 20 tax credits associated with investing in real estate at the federal level, making a building energy efficient, generates tax credits, making a building, renovated from a place of an old worn out real estate project credits associated with bringing a building back to live a building for making the facade easements better the air rights above the building can be sold. And the buildings with the components within a building can be accelerated based on the premium product that’s placed into a billing center, how

Jason Hartman 12:28
do the air rights create a tax credit?

Julio Gonzalez 12:30
Well, basically, the air rights can be sold so and you can sell them as credits, you can sell them as cash. You see, sometimes people don’t need the credit, so they cash them out. And it’s a great market, right? So you have air rights above you, you’re zoned to go up to eight storeys, but you’re at four storeys, and someone wants to go to add stories, but they don’t have any air rights.

Jason Hartman 12:55
Okay, got it. Got it. So you can sell them to that building. As right. They can build hire. Yeah,

Julio Gonzalez 13:01
that’s right. Okay.

Jason Hartman 13:02
So you said there were 20, though.

Julio Gonzalez 13:04
Yeah, there’s so many. I mean, there’s ways to accelerate depreciation within a building through a cost segregation study. Yeah, I’ve done those. Oh, yeah. Yeah, well, we do about 400 a month. So you appreciate those, right. If you make the building energy efficient. One of the credits we’re seeing a lot of now is putting the 5g rooftop antennas up on the buildings. You know, the is this is the government incentivizing 5g for 100%. Right, because their goal is to have the new internet, the new web out there in the next few years in the five carriers really the 18 T’s the Verizon’s of the world are in a desperate race. To get up there. You saw they had two big lawsuits because they said there were 5g everywhere. They weren’t 5g probably nowhere. And so but their FCC licenses require them to be on every rooftop basically. And so that’s a mad dash the property. The problem is they don’t know the property owners, right. And so they’ve been living in the world of big antennas on land, but not hitting on rooftops. And that’s been the big dilemma for them. So yeah, there’s certain tax credits associated with that type of infrastructure, because the government knows that, you know, the automation, and the things that we want to do as a country aren’t available without that 5g web throughout the country.

Jason Hartman 14:20
Yeah, well, that’s interesting. What about the opportunity zone? Are you are you consulting on opportunity zone stuff at all?

Julio Gonzalez 14:27
tremendous? Yeah, we do a lot of that obviously, through the pandemic, we’ve had a little slow down, but obviously the here the cares ag extended the opportunity zone and again, what a wonderful tax program to go into areas that need structures to bring back business and don’t have that infrastructure and and certainly you have some tax gain benefits.

Jason Hartman 14:52
I think they’re gonna have to make that tax benefit even sweeter now, because a lot of those opportunity zones are places where there’s been a lot of civil unrest I mean, I can’t imagine businesses wanting to go into those places that are developers wanting to, you know, anybody wanting anything built there. But you know, I know people will chase tax credits, obviously. But I think before I look at opportunity zone is a pretty complex thing, right. And I interviewed one of the authors of the opportunity zone for the Obama administration on the show before. And you know, you got to be a developer, you’ve got to do improvements, which I think ultimately is just gonna cause gentrification, every government program just backfires. I’m not I’m not very optimistic about government programs doing what they say we’re gonna do. But sure, that’s a philosophical discussion. But But you know, now, I mean, have you seen any projects halted or, or maybe just less interest in stuff because of the civil unrest? And it also a lot of those areas, I would guess would be higher density, too. So there’s the COVID problem, too. What do you think about that

Julio Gonzalez 15:57
post pandemic, the interest just fell off the cliff. I mean, where we were seeing funds and developers, you know, being very proactive, that’s completely halted. We’ve seen projects just stop in the foot tracks. I mean, the pandemic is basically, you know, from what we’re seeing, shut it down.

Jason Hartman 16:16
Oh, wow. So what do you what do you think about that? Is it because, you know, it’s sort of earmarked for areas that would be highly affected, like the migration out of places like that, due to the pandemic, and then the civil unrest?

Julio Gonzalez 16:30
I think that’s a big part of it. And like you said, you know, for that to go, come back, you know, you’re gonna have to greatly sweeten the pie.

Jason Hartman 16:41
Yeah, I agree with you. I agree with you. Well, good stuff. give out your website and wrap it up with any closing comments you have.

Julio Gonzalez 16:47
Well, appreciate it. Our website is engineered tax services.com. And, you know, we appreciate being on your show, and we’re very thankful for what you do. And let’s continue to get the education out there to help people.

Jason Hartman 17:03
Absolutely. Well, thanks so much for joining us.

Julio Gonzalez 17:05
Oh, my pleasure.

Jason Hartman 17:11
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out this shows specific website and our general website, Hartman. Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

AMA 402: Why The Federal Reserve Can’t Stop the Coming Inflation

We have gone from an Everything Bubble to an Everything Shortage. The problem this time around is, there’s nothing our central bank can do to handle a supply shortage causing prices to rise.

Jason Hartman examines the issues currently facing the housing market, and how it’s going to impact it not just today, but in the months and years to come. How are you going to protect yourself from the coming inflation and looming shortages?

Key Takeaways:

[2:17] Self-liquidating debt is a beautiful thing that we can use in income property

[6:23] Even concrete is in demand because of a short supply of SAND

[11:14] The “just in time delivery” can’t withstand any disruptions

[15:51] Technology creates the ability for a level of control over us that’s never been seen before

[17:48] Surging inflation is hitting the US now

[22:37] The Federal Reserve doesn’t have the monetary toolkit to deal with supply side inflation

Website:

www.JasonHartman.com/Properties

www.PandemicInvesting.com

The Coming Financial Crisis & Crisis by Design by John Truman Wolfe

Today’s guest is John Truman Wolfe, former senior credit officer and editor and publisher of The Strategic Financial Intelligence monthly newsletter, to discuss the financial crisis. Jason Hartman and John also talk about BIS (Bank of International Settlements) and the Bail-In Policy. Their discussion also involves evaluating banks and global digital currency.

Announcer 0:01
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.

Announcer 0:12
Welcome to the American monetary associations 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 0:29
It’s my pleasure to welcome John Truman Wolfe. He is the Creator and author of the award winning Tom McKenna Private Eye series. He’s a former senior credit officer for two California banks. He’s editor and publisher of the strategic Financial Intelligence monthly newsletter, and author of several books, including the best selling the coming financial crisis to look behind the wizards curtain and crisis by Design The Untold Story of the global financial coup, and what you can do about it. JOHN, welcome. How are you?

John Truman Wolfe 1:02
I’m great. Thanks very much.

Jason Hartman 1:04
Good to have you. And where are you located?

John Truman Wolfe 1:06
I’m in the mountains north of Los Angeles, about an hour north of LA and up in the mountains in the Los padres National Forest. Fantastic.

Jason Hartman 1:16
Well, I grew up in the Socialist Republic of California, and I got out and moved to Florida for no income taxes. So what do you know?

John Truman Wolfe 1:25
Still have a lot of my friends,

Jason Hartman 1:26
Yeah, you talk a lot about, you know, the derivatives bubble. And I’m not sure I’m characterizing that the way you sample you talk about derivatives. And we’ve discussed that on the show over the years. I, I love to call derivatives. Very simply the thing about the thing. Very simple simpleton term. You know, how big of a concern is this? I know the numbers are absolutely enormous. And when you look at the size of the derivatives market, and what will happen when this eventually starts to implode, or will it ever does it ever have to implode? What are your thoughts?

John Truman Wolfe 2:07
Well, I think, you know, there’s a statement that did you mentioned earlier, all bubbles do and do break this bubble. And these numbers are huge. They’re mind numbing 1.2 quadrillion dollars worth of derivatives on the planet, the major New York banks have 227 trillion with a T dollars with derivatives and there is a point where you go well, there’s, you know, Counterparty one person wins, one person loses. And about 75% of the derivatives on the market are basically bets on the direction of interest rates.

Jason Hartman 2:42
So what percentage is on interest rate that’s

John Truman Wolfe 2:46
about 75%, at various

Jason Hartman 2:49
three quarters of the derivatives market is the interest rate oriented derivatives guide actly. Correct.

John Truman Wolfe 2:53
And we can get into what the Fed may or may not do with interest rates, they’ve said they’re going to keep them essentially zero until 2022. Maybe they’ll do that. Maybe not. But sooner or later, you know, I think this thing will go awry. And it’s all fine if everybody’s financially healthy. But you have, you know, JP Morgan Chase has got over $50 trillion worth of derivatives exposure. And the other big banks in New York money center banks, you know, be evey, Citibank, Wells, banks of that nature have got trillions and trillions of dollars worth. And if the interest rates if slash one, the interest rate, bubble breaks, and a bank can’t honor its obligations, all you’ll need is one incident like that. And I don’t like to be the, you know, the bearer of pessimistic news. But if one of those big banks takes a huge derivative hit, I think we’re looking into financial crisis. Jason.

Jason Hartman 3:56
So do you think the powers that be the central banks and governments around the world would allow that to happen? I mean, it’s kind of ridiculous that now, I actually kind of can’t believe I’m saying this, but I think we can literally hang our hats on the fact that they’re gonna rescue us with more QE and fake money printing. And I mean, it’s just a new world we live in, you know, I don’t think that the public will tolerate any sort of, you know, serious pain worldwide?

John Truman Wolfe 4:31
Well, it’s it’s a good question. I mean, the protection mechanism that the Bank for International Settlements has put in place and for your listeners that aren’t familiar with that bank, and many people are not. The Bank of International Settlements are referred to as the godfather of the financial global financial mafia. This is the central bankers central bank. It’s in Basel, Switzerland. They basically call the shots A couple of years ago, they implemented a policy globally called Balian policy bailin. policy says, if a bank is failing, then that bank has the right to take depositors currency deposits, and convert it to bank stock without any permission whatsoever.

Jason Hartman 5:21
It’s kind of a Cyprus esque sort of thing, isn’t it?

John Truman Wolfe 5:25
It that’s exactly what it is in Cyprus was the test case, for the BI s implementing this policy. They did it in Cyprus, there was a good deal of press from this little offshore bank, which held the deposits of a lot of ex KGB characters. And that incident was the pilot for bailing policy around the world, there are now bailing policies mandated in Europe by the President of the European Central Bank, Canada implemented it. And there’s actually a document focusing, go online and look at it written by jointly by the FDIC and the Bank of England, that explains how by lm policy will work here. And then Ben, by the way,

Jason Hartman 6:07
we should just give our listeners a little backdrop for that, john. So you know, back maybe, what, 810 years ago, if you went to sleep, and you you were a Cypriot citizen, and you woke up and check your bank balance, again, you would have less money, right? They literally just took your money out.

John Truman Wolfe 6:26
It’s exactly right. And that’s what baling policy can you know, can do they just, you know, they took a certain percentage of the deposits and converted it to bank stock. Well, you know, I mean, who wants to stock in a failing bank? Yeah, maybe somebody but not the average Joe,

Jason Hartman 6:43
especially when you didn’t want to be a shareholder, you didn’t agree to become a shareholder, you just felt we’re essentially forced. It’s like, here’s the gun to your head, buy our stock with your deposit money. That’s exactly right. Okay, go ahead.

John Truman Wolfe 6:59
So the big the Bank for International Settlements, implemented this policy because they saw what we were talking about, that the derivatives, the interest rate sensitive derivatives had gotten so huge. That bailing policy basically protects the banks. So if you know, the derivative bubble breaks in a particular bank, that bank has the right now, under big policy. And in the US, Dodd, the Dodd Frank bill legalized that in the United States, they can come in and take a certain percent of your deposits.

Jason Hartman 7:35
Yeah. Right. So so that was really an in the what, 2300 or so pages of Dodd Frank, this extremely confusing. Well, aren’t they all confusing? They’ll that was stuck in there, too, huh? No, nobody’s talking about that. Unbelievable. Yeah. What? So we’ve gotten Dodd Frank. So do you think that would be a amount over the 250,000 FDIC limit or any amount or silver? Good

John Truman Wolfe 8:04
question, the memo that the FDIC and the Bank of England jointly wrote, does not mention FDIC insurance, there is no online traffic where it appears that the FDIC insurance would not apply. But I’ve contacted the FDIC, they’re non committal on the subject. So I actually don’t know what would happen. I think it would depend on how big the crisis became.

Jason Hartman 8:33
Yeah, and the FDIC certainly doesn’t have anywhere near enough to cover a real crisis by any means. But my contention is that government will just fill the void with fiat money. So what should we do with this information? I mean, you know, for those people who have extra cash that’s not in the stock market, it’s not in real estate, where, which is where it should be, it should be an income property. I say, what should they do? I mean, you know, what banks are safe? Do you go with the big banks? Or do you go with the most financially sound banks, the theory being the big banks are going to get bailed out, even if they’re not financially sound? But but the banks aren’t really is. They’re not as reckless as that as they were, before the Great Recession or a right things are things are better for the banks now, at least, that’s what people say?

John Truman Wolfe 9:22
Well, again, I think what puts the banks at risk is the amount of derivatives the big banks and now to answer your question, which is a really good one is this baylin policy applies to banks with assets in excess of $50 billion. So I encourage folks, you know, if you’ve got money in one of the big money center banks, if that’s a you know, the household budget money, okay, it’s a few bucks, but open your major accounts in a regional bank, smaller regional bank, a bank with assets under 50 billion, because As it stands now, baling policy applies only to banks of 50 billion and larger.

Jason Hartman 10:07
Right. So the problem with that is that the small banks may not be able to withstand a crisis, but at least you won’t have the bail in recce risk. Right. So it’s like you’re damned if you do damned if you don’t, maybe, huh,

John Truman Wolfe 10:21
at least they’re not gonna come and take your your deposits in the middle of the night without your permission.

Jason Hartman 10:27
Right, right. But they might fail. That’s, that’s the thing. So then you have to get into really, really doing something Americans just aren’t used to doing at least not since the you know, before, before during the Great Depression, is understanding how sound your bank is, then keeping track of it, because that is a moving target. This

John Truman Wolfe 10:48
is why I did the hundreds of hours of research and wrote a book called The 99 strongest banks in America, because after I wrote the bank and kind of pointed this out, I got into tremendous amount of traffic going okay, good. Well, where do I bank? So I just went through the balance sheets of the banks all across the United States, and at least made recommendations of about 100 really sound banks with a good loan to deposit ratios and, and, and healthy loan portfolios.

Jason Hartman 11:17
And that’s a fantastic tool. I just wonder, don’t we have to worry about it changing all the time, right?

John Truman Wolfe 11:23
We do it do. We do? We do. Indeed, you know, the real estate market changes. I mean, it’s surprisingly healthy Now, given the, you know, current economic situation in the country, the real estate market continues to boom. Oh, good. But

Jason Hartman 11:38
you’re saying Yeah, I know, the markets booming, that’s for sure. But you’re kind of implying that the banks are really tied to real estate, like they were the last time around is that way by? you’re mentioning real estate? No,

John Truman Wolfe 11:49
I mean, I don’t say I mean, there are still so called mortgage backed securities, nowhere near the amount that there were during the crisis of 2000 2017.

Jason Hartman 11:58
And also, to be fair to the banks and the mortgage industry. You know, they’ve been a lot more conservative this time around. I mean, I’m not saying they’re perfect by any means. But there’s there at least there are some entities putting brakes on the system this time around. Whereas last time around, nobody was putting brakes on the system. It was everybody was incentivized to just put out more toxic loans.

John Truman Wolfe 12:23
Yeah, you’re absolutely right, although things have started edging in the, you know, in the direction of 2007 2008. But you’re right there a lot more regulations in place. And I think banks just from for their own survival, have been more judicious in terms of the kinds of loans that they’re making.

Jason Hartman 12:42
Now, I’m looking online now. And I see the 27 best banks, but I don’t see a 99 banks. I’m not sure how long ago this book was published. So you know, that’s another question. You said, The book was called the 99 best banks that.

John Truman Wolfe 12:59
Remember, the 27 banks, when I started doing the research, and it took a fair amount of time. And as you noted, in my bio, I’m a former senior credit officer for a couple banks here in the West Coast. I wrote the 27 best banks, and then I got a fair amount of traffic. Well, yeah, but what about my state? So I’m back and I basically updated it. So the 99 shouldn’t be up there in Amazon. I don’t go look at it every day, but I don’t see him.

Jason Hartman 13:27
In the 27 Bank book is four years old, how old is 99? Two years. Okay. So and how, how quickly do you think I mean, you really have to look at your bank, like every year and evaluate their financial condition on an annual basis. That’s a hassle.

John Truman Wolfe 13:46
It is a hassle, you have to know what you’re looking for. I mean, the bank rating as one of the reasons I wrote the book is is that the bank rating agencies and there are a couple of them, were giving five star ratings to banks that had loan to deposit ratios in excess of 100%. In other words, they not only lent out all the depositors money, but then themselves went and borrowed money and lent it out. And that’s just not healthy. But these rating agencies at all is a Five Star Bank. And I you know, not not five stars in my heavens,

Jason Hartman 14:21
you know, and remember the Moody’s ratings the last time around, right. What a same. Exactly, yeah. Unbelievable. So you talked a lot about this being a this are the last crisis, I guess, being a crisis by design. You know, my listeners are familiar with the concept of a false flag. What do you mean by that? And what’s the point of designing a crisis?

John Truman Wolfe 14:44
Well, the truth is, my feeling is is that crisis was designed to take down the US dollar. And if you look at the strength of the dollar and what has happened to it over the last few years, it has slowly declined to the point that it is It’s certainly still has its reserve currency status, but it’s slipping. You know, China and India now do business in their own currency. So the BRICS is set up that economic organization of, you know, Brazil, Brazil, Russia, China, India and South Africa. And they’re all doing business in their own currencies, which was maybe 10 years ago, this was unheard of all international trade was done with US dollars. Not anymore.

Jason Hartman 15:29
Yeah, I know, there’s inkling of that. But I’m not to fear that the US because you know, the problem is the US. It may be bad in all these ways, but compared to what I mean, what we think are we supposed to think that like Russia and Brazil are better off financially than we are?

John Truman Wolfe 15:46
Fair enough. And that’s why the dollar still stands as it stands. But it’s my point is, if you kind of look at a graph of it, it’s it’s slipping, it does not have the strength that it had Now, does that mean you you run from $1? Tomorrow? No, it does mean that the yuan is gaining strength. I mean, China is inhaling gold, like there’s no tomorrow. I mean, so is Russia. But China has been shown a newsletter on the gold war between the US and China. I had when I when I wrote the book, originally, friend of mine in Taiwan, sent to some people in Beijing. And you know, and then she sent me an email, she said, you know, the government of China would like to talk to you about the solutions. In the book, I thought it was a joke, as well, I hadn’t fly me over business class and put me up here, I in the Beijing a few times, she sends me an email back, they’ll fly wherever you want, however you want budget wherever you want. So I flew to Beijing, I spent a week there talking to people that had founded the pboc, the People’s Bank of China, and also met with the president of China gold, which is the largest gold mining Consortium, in China, and probably around the world, this guy has 40,000 employees. And Jason, he’s buying a bowl mines around the planet like Pac Man, everywhere, the US, South America, and so forth. So they’re making a very strong run to if not back the RMB the Chinese currency with gold to make that currency, stronger than the US dollar. So while that’s not a crisis situation today, I think it’s one that’s coming.

Jason Hartman 17:30
You know, I just, I don’t know, I hear that a lot. And I just, you know, respectfully have to disagree, I just think the US is going to maintain its hegemony for a long, long time. You know, China in 10 years, has a giant demographic problem. After COVID nobody trusts China anymore, you know, those jobs are moving back to the US, a lot of them a lot of that manufacturing is moving back here. And they’ve got one aircraft carrier, we’ve got What 12? It’s just, I don’t know, you know, and I don’t think China is gonna go to war with us either as this, you know, much as I hear those things, you know, you don’t go to war with your customer, your biggest customer? And yeah, you know, the US is a it’s a the whole thing, the whole global economy is built on smoke and mirrors. It’s absolutely impressive in a way we got to this point. I mean, don’t you think? It’s, it’s like the biggest show game ever? You know,

John Truman Wolfe 18:26
it’s a good point. And your point, and your points are well taken. And, you know, I talked to the friends that have strong points of view as as yours. And they’re basically like, you know, China’s so far from us. It’s true. But if you look at a graph, the growth in strength of the Chinese economy, and particularly the RMB, the Chinese currency is up now, does that mean that the dollar is going to fall, you know, fall to nothing tomorrow? I think what’s more dangerous Jason for the dollar, is the fact that the Fed is throwing what, four or $5 trillion into the economy out of thin air 5.2, I

Jason Hartman 19:05
believe is the latest number. It’s It’s insane.

John Truman Wolfe 19:08
I can’t keep up with it.

Jason Hartman 19:09
Yeah, but you know, other other central banks are printing to, I mean, you know, it’s not like we’re the only one and we just have this fantastic position, reserve currency, the most debt in the world is owed to us. And it’s all denominated in US dollars, which makes the dollar stronger. The biggest military, the biggest economy, the fact that all the Chinese people want to bring their money here because you know, we still got that Brinks truck reputation, but I tell you, if a bail in happens, we’re gonna lose that quickly. Okay, and people might feel safer keeping their money offshore. I don’t know. You know, it’s just a very, it’s just a very complex mix of things. What I fear more though, is a move toward a digital currency. That’s a central bank and government sponsored digital currency. That would cause us to lose spending privacy. And that would cause you know, and it might be a move toward a world digital currency. And if that ever happens, it’s just checkmate, you know that there’s no freedom whatsoever, because you can’t go to another jurisdiction to have any degree of privacy or, you know, change the system. So that that’s, that’s what I hear more is this, this this world government concept? And, you know, we’re in it, maybe it’s probably not a world government, per se, but a world monetary system that is stronger than the world monetary system we have now dictated from Basel II. Any thoughts on that?

John Truman Wolfe 20:43
Well, you’re one. You’re absolutely right, too. I’ve written on that subject that’s on line three. And you may or may not be familiar with Christine Lagarde, who was at the time the head of the IMF, she was in New York for a conference and some reporter asked her about that very after about digital currencies. And surprisingly, she said, You know, these, you know, these are going to be good for the future. So I think that’s a real potential problem. That the, you know, in some way, they’ll make the SDR, which is the IMF, currency, digital, or there’ll be a digital a global digital currency. And then as you say, there is no national currency, there’s nowhere to go. So I think that’s something to be very concerned about. Digital. cryptocurrencies, the Bitcoin and friends are not going to go away, they’re here to stay. And the question is, how are those going to be dealt with China is developing a national digital currency. So as Russia, there has been peeps out of the Fed, that they’re doing going to do the same,

Jason Hartman 21:45
it’s definitely coming, they’d be crazy not to do it. Number one, it makes them look modern. But number two, it gives them so much control over the population. And you know, it’s like, if you don’t get the vaccine, you don’t get your government digital money, you know, or you can’t use your money, you know, that with China doing their social scoring, something like that could be see the difference is the US the people in the US won’t tolerate as much of that they’ll Yeah, they do it slowly. How do you boil a frog Of course, we’re all getting boiled. But there’s this kind of rugged individualism that just pervades the, you know, the, you know, don’t tread on me, Gadsden flag mentality in the US, thank God that keeps the government somewhat at bay, you know, it’s, it’s lessening, but at least there’s a move there in China, you know, with look at what’s happened in Hong Kong recently. I mean, that’s China’s getting pretty scary. And there’s going to be massive capital flight from China more and more with with that kind of totalitarian crackdown that they’re having. So wrap it up for us, give out your website and tell people where they can get newsletter, you know, books, all the usual places, of course, but you maybe your newsletter,

John Truman Wolfe 22:56
yeah, the newsletter is strategic financial intelligence.com. That’s kind of a mouthful, but that’s what it is strategic, you can go to strategic Financial Intelligence COMM And the newsletter is called strategic Financial Intelligence. I write it monthly. In addition to that, I do a weight a weekly radio show called the junk removal financial hour, and I take that converted to text and send a transcript audio and written to the subscribers each week. And we have you know, we interviewed various folks and that’s the newsletter strategic Financial Intelligence calm.

Jason Hartman 23:34
Excellent. Well, john, thank you so much for joining us.

John Truman Wolfe 23:38
My pleasure. Thank you so much for having us. It was a good discussion.

Jason Hartman 23:46
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

1,000 Years of Global Financial Data with Bryan Taylor

Today’s guest is Dr. Bryan Taylor, President and Chief Economist at Global Financial Data. Jason Hartman and Bryan discuss the history of interest rates and housing costs and the impact of Coronavirus on the economy. They also talk about technology and how it has solved the necessity of living in urban areas. Currently, technological advances have taken away the demand for living in highly populated areas.

Announcer 0:01
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.

Announcer 0:12
Welcome to the American monetary associations 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 0:29
It’s my pleasure to welcome Dr. Bryan Taylor. He is president and chief economist at global financial data. They specialize in providing financial and economic data that extends back to the 1000s. That’s right, a millennium of data and going on into current day. So we’re going to examine a long term history of financial and economic data. And this is beyond what any other data provider has ever delivered. So I think you’ll find this to be a fascinating interview. Dr. Bryan Taylor, welcome. How are you?

Dr. Bryan Taylor 1:01
Oh, I’m doing fine today.

Jason Hartman 1:03
Good. And you’re coming to us from my old hometown area. Orange County, California. You’re in San Clemente? Right.

Dr. Bryan Taylor 1:08
Absolutely.

Jason Hartman 1:09
Excellent. Excellent.

Dr. Bryan Taylor 1:09
Little bit of an outcast here today but it’s always beautiful by the afternoon.

Jason Hartman 1:14
Good stuff. Well, hey, one of the things I’ve been saying on on the show for a while now is that interest rates are the lowest they’ve ever been in human history. Can you elaborate on that for us and talk to us about the long term history of interest rates? And are they really the lowest they’ve ever been in all world history?

Dr. Bryan Taylor 1:33
Oh, absolutely. The yield on the 10 year bond today is under 1%. And until a few months ago, the yield was never below 1%. In Europe, interest rates are negative for Germany and several other countries. And that simply has not been true. Now, this is the combination of what we call the interest rate pyramid, that from 1940, during World War Two, up until 1980, interest rates increase from around 2% to double digit levels around 15%. During the past 40 years, they have decreased to the point that now they’re under 1%.

Jason Hartman 2:19
Just amazing. So when we talk before, this is actually the second take on this interview, we had some technical problems, as everybody experiences that when we talked before you were talking about coming up on to the environment we’re in now. And I know you mentioned World War Two, and you know, even before that, and kind of what was going on. So give us a little background there.

Dr. Bryan Taylor 2:41
Sure. The reason that interest rates were so low in 1940, was that the government wanted to minimize its cost of funding its debt, that during World War Two, the government debt exceeded GDP. And so if the government could keep interest rates low, which they did, that would save the government a lot of money. And so they deliberately push down interest rates. What that did, though, was it created inflation. And so they couldn’t keep interest rates low after the war. And then from 1951, on the market was allowed to determine interest rates, and the government ran deficits. And one thing led to another and interest rates kept going up and up and up till they were at double digit levels. People getting mortgages had to pay 18 or 20% interest on their mortgage. It was insane.

Jason Hartman 3:38
Yeah, yeah. That was kind of the paul volcker era you’re referring to now, right? Yeah,

Dr. Bryan Taylor 3:43
Yes, absolutely. And he reversed thing.

Jason Hartman 3:46
He broke the back of inflation. He’s, you know, long been credited for that. And just recently passed away, as we all know, was that the right thing to do what Volcker did? It was pretty painful at the time.

Dr. Bryan Taylor 3:57
Yes. And you had to go through that pain because interest rates were going up, there was no end inside, people thought that double digit inflation and double digit interest rates were going to be around forever. And the only way to change things was to change the psychology workers were demanding double digit increases in wages, because they were anticipating higher inflation. And until you broke that mentality, until you convince people that inflation was not going to go up anymore, interest rates would not decline. And it worked. There was pain in the short run. But over the long run, you can see the result, interest rates are no longer at 18% interest rates now, for mortgages are 3% or even 2%. So it was a success.

Jason Hartman 4:48
So with this engineering of the economy that we have, that’s the you know, the environment we live in, obviously, our interest rates too low now, or I mean there are good and bad effects on on both sides of this equation, right?

Dr. Bryan Taylor 5:03
Yeah. But I do not think that interest rates are too low. Now, I think that interest rates are going to be at this level of around 1%. For the next 10 years, what we did was we carried out an analysis of total returns to bondholders. And what we found was that the interest rate at the bond yield any point in time is a good predictor of what your total return will be by investing in bonds over the next 10 years. And that pattern has followed through for the past 50 years. And so if you use that analysis, then there’s no reason why interest rates will not stay around 1%, or maybe 2%, for the next 10 years. And that’s just a reality that people are going to have to expect. I know most people expect that interest rates are going to bounce back, they are going to start going up. Our analysis shows that’s just not true. People have to get used to an environment in which there’s almost no yield on fixed income securities. That’s just the new reality.

Jason Hartman 6:14
And that really does hurt savers and older people, usually, because they’re usually the savers living off fixed income or fixed-income investments, I should say, even what are your thoughts there?

Dr. Bryan Taylor 6:27
No, that’s absolutely true. I mean, there’s no place to hide really, the only place where you could get a decent return would be the stock market. But then that involves taking a lot of risk in terms of the ups and downs of the stock market. But

Jason Hartman 6:41
Well, don’t don’t forget about income property or real estate as an investment. But yeah, so

Dr. Bryan Taylor 6:46
No, that would alternative.

Jason Hartman 6:49
So basically, the powers that be have pushed people in to really taking more risk, whatever the investment is, because they’ve got to get some yield somewhere. What are the consequences of that for society?

Dr. Bryan Taylor 7:02
Well, you just gonna have to have a different mentality. I mean, people have expected for years that they can get a fixed rate of return and rely upon that for their retirement, this is not going to be true in the future, is also going to affect the government in terms of pensions, that most of the pension plans are expecting higher rates of return than what they’re going to get. That means that the government’s going to have to borrow more money in order to pay for all these pensions, which they have promised. And it’s going to start to create a mess over the next 10 years. How they get out of it. I don’t know. But it’s just a problem they’re going to have to face.

Jason Hartman 7:43
Is inflation coming? Oh man, it’s all right here, many would argue. Grocery prices are certainly at a five decade high. We know that. But what’s the outlook for inflation?

Dr. Bryan Taylor 7:53
I think inflation is going to remain low, I do not see any return to the high inflation of the 1970s. You just have a lack of demand out there. And that’s what’s really controlling the prices more than the inflationary factors of less supply.

Jason Hartman 8:12
So I mean, if they pump enough money into the economy, though, can’t they just create inflation, no matter what, you look at what’s happened to housing, just in the past two months, I mean, the market is off its rocker. It’s just unbelievable how housing is just going through the roof right now, in terms of demand, there, there’s very little supply, that’s gonna lead to inflation, ultimately, right with these these incredibly low interest rates or no?

Dr. Bryan Taylor 8:43
Well, no, not necessarily. If you look at Japan, Japan has been trying to create inflation for a decade.

Jason Hartman 8:51
I know, but I hate that Japan example. Because Japan doesn’t have a population, you know, that they’re just going through. I mean, they’ve got a demographic problem that is probably never been experienced before. I mean, Western Europe and Russia are next. But Japan is the worst of the worst in terms of demographics. You know, and they don’t, they don’t have any immigration. So it’s like this closed system, and a population that is in massive decline. And as they age, there’s no younger workers to support those older retirees. It’s a very imbalanced if Japan doesn’t start either making babies or having immigrants. That country’s over.

Dr. Bryan Taylor 9:32
Yeah, no, it’s true.

Jason Hartman 9:33
So So does that apply, then? I mean, you know, I just want to draw that out from you if I can.

Dr. Bryan Taylor 9:38
No, I mean, I agree with you completely. But I mean, that’s where the United States and Europe are headed. I mean, they’re projecting that the population for the world will peak in a few decades and start to go down. And that’s the reality and, you know, I mean, I see no reason why the stock market fifty years from now won’t be very much different for where it is today, simply for that reason, in Japan, you not only have a lack of increase in the population, but no increase in GDP, you know, no increase in the profits. And unfortunately, that’s where the United States and Europe is headed. Now, the United States is much better off than Europe or Japan,

Jason Hartman 10:24
Yeah. It’s massive,

Dr. Bryan Taylor 10:26
It’s just delaying the inevitable it may be it’ll happen here in a few decades, rather than today, or in the next decade, it will happen in Europe. I mean, if you look at the European countries, some of the stock markets for France and England and other countries are still below where they were at 20 years ago.

Jason Hartman 10:45
Right. Yeah. And I agree with you that that problem is coming. But it’s a ways away in terms of the demographic problem, the US, the US is still got a healthy trajectory for a few decades. But that is ultimately coming. You’re absolutely right. I totally agree. And it’s, it’s a worldwide problem, you know, the mouth museums have convinced everybody not to have any kids. And so, you know, that’s, that’s where we’re going. Very low birth rates in many, many parts of the developed world. It’s just the way the way things are. It’s a real change. But take us through history a little bit. And especially because your data goes back so far. And that’s what I just love about what you do. Too many people are looking at such short term analyses of everything. Let’s just look back 102 years, we don’t need to go back 1000. But talk to us about the Spanish flu and, of course, started in Kansas City, probably. So I don’t know why it’s called the Spanish flu. But we what happened economically? And what was the recovery like from that? And does it apply to our world today? Or is it just a completely different thing?

Dr. Bryan Taylor 11:50
Well, in a lot of ways, it is a completely different thing. Because you have to remember, the Spanish Flu not only happened throughout the world, but it happened in 1918, in the middle of World War One. And World War One acted as a tool to spread the Spanish Flu from Kansas City, to Europe, and to the rest of the world. So if you want to look at it from an economic point of view, I mean, prior to the Coronavirus coming into play, you had international trade, you had huge amounts of imports and exports throughout the world. But the world in 1980 was more of a closed economy because of World War One. And so on the one hand that did help the Spanish Flu to spread. But on the other hand, part of the worry is that now there’s less travel, there’s less interaction with the rest of the world. And that’s what’s really hurting us badly. But and that’s why the economy went down so dramatically. But you know, as some people have said, this is the first government induced recession

Jason Hartman 13:00
Right. Now,

Dr. Bryan Taylor 13:01
And that’s just the reality of it, because at some point, you have to stop the flu from spreading. Europe has been effective in doing that the United States has not. And until we can find a way to stop the flu from spreading with a vaccine, it will continue to hurt the economy. Now, the stock market has not responded in the way that I think a lot of people have expected, but that’s mainly because the stock market is looking out several years in the future. When the stock market is anticipating then we will have dealt with the Spanish Flu rather than looking at the immediate picture which is quite dire.

Jason Hartman 13:40
And you meant to say Coronavirus, I think.

Dr. Bryan Taylor 13:43
Coronavirus .

Jason Hartman 13:44
Yeah. Right. Okay. So in other words, the stock market is showing optimism, or is that just a result of the massive money pumping printing that is going on? Is that real optimism or is it you know, just induced by the Fed and the government?

Dr. Bryan Taylor 14:01
Well, it’s definitely induced by the Fed and the government. However, I think what the stock market is doing is trying to anticipate what the post Coronavirus world will look like. What will be the companies that are successful? What will be the sectors that will not do? Well, no energy is doing very poorly. consumer staples in a lot of cases are doing poorly. So there’s this massive reorganization of the economy that’s occurring. And the sub markets trying to anticipate that now they’re probably overestimating the good side to companies like Amazon Apple, the Fang stocks, and under estimating the negative impact to companies like JC Penney and others. But I think that that’s what’s going on. The stock market is trying to anticipate where we’re going to be five years from now what sectors are going to succeed and which ones will fail.

Jason Hartman 15:00
So when we look at that, actually, let’s just talk a little bit more about the Spanish Flu if we can, what was that, like post Spanish flu? 1918. In 1920, we had the roaring 20s. And for a decade, everything was roaring, if you will. And then, of course, the Great Depression. Is that how we’re going to come out of this? Is that is that going to be that? You know, are we gonna have the roaring 20s again? You know, starting in a year or so?

Dr. Bryan Taylor 15:28
Well, I mean, it’s certainly possible. I mean, the, not after the Spanish Flu was controlled. Back in 1918, the stock market did start to bounce back. I mean, if you look at the Dow Jones Industrial Average back then it really sort of tread water at 1918. But then once the war was over, the Spanish Flu was taken care of, then the market bounced back. And I anticipate that that’s what’s going to happen here, that once we find a cure for the Coronavirus, and people can see that you’re going to have music concerts, again, you can go out you can do things that the market will bounce back. You know, I’ve been predicting for decades that we’re going to have a great bull market in the 2020s. Because if you look at the 20s, for every decade in history, you have had a massive bubble, you have the South Sea bubble in the 1720s, you had the bubble for the South American stocks in the 1820s, you had the roaring 20s in the 1920s. And, you know, you’ve had had sort of a plateau here and most of the world. So you have laid the foundations for a large amount and growth in the 2020s. And so that is our prediction that we will have a bubble in the 2020s. I’ve written several articles on that.

Jason Hartman 16:57
So just to be clear on that prediction, the prediction is Coronavirus is either treated, or there’s a vaccine, and everybody feel safe again. And then we go into a booming economy. And how long would that last?

Dr. Bryan Taylor 17:13
I think it would last several years. So it lasts, you know, probably for most of the decade. And you know, especially since the Fed now is feeding money into the economy, bonds do not provide an alternative. And so people will put their money where it works. And the stock market and real estate is where it’s working. I mean, you’re going to have a massive realignment of the real estate market. Because now people more and more people will work from home. And I mean, that’s what’s happening in our company. And so people don’t want to be stuck in a place where you’re in an urban environment that you hate to be in, why not be out here in San Clemente on the beach, if you can work from home?

Jason Hartman 17:58
No, I totally agree with you about that. That is a massive shift. And that does not bode well for high density, urban environments. Cities are really going to hurt very badly. You know, as I’ve been saying the past several months, you know, the two biggest danger zones are elevators, and then mass transit. Yes, those are the things that all the environmentalist want. They want people in high rises in little boxes and taking mass transit. And I think there’s going to be well, I think there already is a huge rebellion against that. And a major major push, just a mass migration really, to the suburbs. And

Dr. Bryan Taylor 18:39
No, I agree completely. And that’s just going to be the reality and the readjustment that’s going to take place. So it can’t be reversed.

Jason Hartman 18:48
Do you think that continues though? After there’s an effective treatment or vaccine?

Dr. Bryan Taylor 18:53
I think it will. Yeah, I mean, because most people prefer to work from home. I mean, that’s just the new reality.

Jason Hartman 19:00
Right? Right. And not just the half though, I think there’s going to be a level of PTSD, Post Traumatic Stress Disorder about this, because even when, let’s just remember folks, even though it didn’t affect most people’s lives, it was nothing like the doomsayers had predicted. But you know, remember the your thoughts about swine flu and h1 in one and, and you know, even mad cow disease? And everybody knows, there’s another thing coming. This is just the history of the world. There’s always something and, you know, say there is no virus concern. Maybe it’s just civil unrest. And now we’ve got that and guess where that is? It’s in all the high density urban areas. So get another reason to get out of those areas. And people have discovered that they just don’t need to live in a city anymore because the technology has solved that problem for us.

Dr. Bryan Taylor 19:54
And there’s just going to be an anticipation What if it happens again? I’m going to be prepared. I’m not going to take a chance. Right?

Jason Hartman 20:03
Yeah, I agree with you. I agree completely. Well, what else can you tell us about history of the last 1000 years? I mean, it, you know, most of my guests cannot talk about that effect. They can talk about what happened in the 70s. And, you know, the great recession in 2008. But they’re not going to talk to you about the bubonic plague. There’s another one right, or, or whatever else, right?

Dr. Bryan Taylor 20:26
We actually have data on bubonic plague, we have data on housing prices, they go back to the 1200s. And what’s interesting was during the bubonic plague, of course, 1/3 of the population got wiped out. But of course, 1/3 of the housing did not get wiped out. So there was the largest drop in housing prices in history.

Jason Hartman 20:51
That’s 1200 ad. Okay, so you lost a third of the population or in the 1300s. Okay, and you lost a third of the population. And you didn’t have I guess, a housing shortage back then. So now there’s a significant loss of demand. And then the existing supply was still there. Tell us more about that.

Dr. Bryan Taylor 21:11
Yeah. And so it actually took several centuries for housing prices to go back to the level that they were at prior to the bubonic plague. Wow. And you know, it really, if you were a worker, you were just living in heaven, homos. Yeah, because you were in high demand, because there were not as many workers available in the labor pools there have been prior to the bubonic plague. And so that everything shifted, feudalism came to an end, in part because the bubonic plague. And those are the long term impacts that you can see. I mean, you’re talking about low interest rates. Well, the last time that interest rates were this low, was back in the 1800s. And so if you really want to study what’s going to happen in the future in the economy, you have to go back to before World War One, when interest rates were low, and see how the economy reacted when inflation was slow. I mean, the anomaly really has been over the past eight years, when interest rates and inflation increased dramatically from the 1940s to the 1980s, and then decreased dramatically, you’re just simply not going to have that pyramid that you’ve had in the past, you have to look out of what’s going to happen in an environment where there’s little increase in demand, because there’s little increase in population, and your interest rates are low, your inflation is low, it’s going to need to have a complete change in the mentality. And the only way that you can understand this is by looking back to the pre World War One World, which we collected data on, our data for the stock market goes back to 1601. So we can look at for centuries of the behavior of equities throughout the world to understand how they have responded to different environments. And that’s really the advantage of having several centuries of data is that you can look back to what happened 100 years ago, or 200 years ago, when you have circumstances that come up, that haven’t really occurred for centuries or decades. If you’re only looking back over the past 20 years, you don’t have a full picture of the world and how financial markets are going to react to new circumstances.

Jason Hartman 23:42
Now, but that almost seems to contradict what you were saying at the beginning of the show. I mean, interest rates are actually lower now. But they were they were very low then, I guess. And now they’re even lower. Right?

Dr. Bryan Taylor 23:52
Correct. Correct.

Jason Hartman 23:54
In those two instances, you talked about 1800s andnd pre World War or about World War One, I think you said.

Dr. Bryan Taylor 23:59
Well, yeah, well, interest rates were low and declining throughout the 1800s, they bottomed out about 1900, and then steadily rose, really for most of the 20th century. And then they decline towards the past 40 years. And we think it’s going to return to the situation in the 1800s, where you have low interest rates, you have to look at how commodity markets, our real estate markets, our other markets existed in an environment of low interest rates and low inflation, which we anticipate is going to happen in the next 20 or 30 years.

Jason Hartman 24:37
So reliability of data when you go back over such a long time. I mean, you’re talking about housing prices in the 12th century. How do we know you know, I mean, that data just cannot be very reliable, right? How do we even know?

Dr. Bryan Taylor 24:55
Well, there were monks back then. And monks keep track of all The prices that their monasteries had to pay. And that’s our source of the data for, you know, the 1700s, the 1800s, all of these data is available from newspapers. And so we go back to the London Times, or the dosha Quran or other papers, and we take the data directly from the newspaper. So it’d be similar to going to the Wall Street Journal today. Sure. So we have gone back to the original sources, that monks have provided us that newspapers have provided us collect the data, organized it into a digital format, and then provided us the centuries of data that we have.

Jason Hartman 25:44
Fantastic. So so 800 years ago, it would be monks that we’re talking about, and they weren’t all over the world when we talk about, you know, housing prices, in what areas? I mean, it’s a big, it’s a big world, obviously, what areas are they addressing that can’t be addressing a worldwide market? Right?

Dr. Bryan Taylor 26:04
No, it’s mainly Europe, family, friends, and lenders, where the data come from. Monasteries collected this data back to the 1200s. There were local city governments in France, as well as monasteries that collected it. So yes, I mean, the data is localized to France and England, in Italy. And then we use that to extrapolate to the rest of the world.

Jason Hartman 26:29
Sure. Very interesting. That’s fascinating. What else do you want to share with our listeners, maybe something I haven’t asked you just just anything?

Dr. Bryan Taylor 26:37
Well, we just, know that it’s important to have an understanding of the past in order to anticipate the future, that the world today is similar to where it was 100 years ago. And if you don’t look at the past, if you don’t look at stock market, commodity prices, other factors over a long period of time, you’re not going to be able to anticipate where we’re going to be over the next 10 years. I mean, I think everyone’s prediction of higher interest rates and higher inflation is just wrong. I think that we have a new era in which the government is trying to ensure that we don’t have high inflation, that we do keep things under control. And that’s my contrarian analysis of the market.

Jason Hartman 27:27
Yeah. And you say it’s contrary because usually low interest rates create inflation. You’re saying this time it’s different, right?

Dr. Bryan Taylor 27:35
Yes, this time, it’s different.

Jason Hartman 27:37
Okay. And just just to completely understand you, why is it different this time?

Dr. Bryan Taylor 27:41
It’s different this time because interest rates will remain low,

Jason Hartman 27:46
Right. But that would cause inflationary pressure or No,

Dr. Bryan Taylor 27:49
No, no, okay, the lower interest rates are response to low inflation, not vice versa. So we anticipated inflation will remain low. If inflation remains low interest rates the main low, and that’s in part because of the lack of demographic growth that is out there, and the lack of GDP growth that will come from that.

Jason Hartman 28:12
Okay, good stuff. Give out your website.

Dr. Bryan Taylor 28:14
Our website is global financial data.com. And there are hundreds of articles and blogs that I have written, that are up there under the insights section for people to look at read and understand and learn from the past to understand the future.

Jason Hartman 28:33
Good stuff. Dr. Bryan Taylor. Thanks for joining us.

Dr. Bryan Taylor 28:37
Thank you.

Jason Hartman 28:43
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